NEW YORK (TheStreet) -- Shares of Copa Holdings, S.A. (CPA - Get Report) are slightly lower by-0.27% to $122.84 in early market trading after the Latin American airline company was downgraded to "equal weight" from "overweight" at Morgan Stanley (MS) .
Analysts at the firm lowered its price target to $142 from $163, and cited the negative margin impact from a 50% capacity reduction in Venezuela.
Morgan Stanley added that despite Copa Holdings' successful capacity relocation, its lower sales on higher fares mean limited catalysts for the airline company.
Separately, TheStreet Ratings team rates COPA HOLDINGS SA as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate COPA HOLDINGS SA (CPA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth significantly trails the industry average of 48.4%. Since the same quarter one year prior, revenues rose by 13.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
- COPA HOLDINGS SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COPA HOLDINGS SA increased its bottom line by earning $9.63 versus $7.35 in the prior year. This year, the market expects an improvement in earnings ($10.81 versus $9.63).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Airlines industry and the overall market on the basis of return on equity, COPA HOLDINGS SA has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Airlines industry average, but is greater than that of the S&P 500. The net income increased by 58.7% when compared to the same quarter one year prior, rising from $74.44 million to $118.17 million.
- You can view the full analysis from the report here: CPA Ratings Report
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