Panama's Copa Airlines (CPA) is in the sweet spot: Its margins are growing, Latin America is a bright spot in a bright global aviation picture and investors seem to have developed an unbridled enthusiasm for the stock.

Copa shares closed Friday at $111.98, up 23% year to date and up 116% in the past 52 weeks.

Last week, Copa hosted an investor day in New York, the same day the International Air Travel Association reported on Thursday that Latin American airlines experienced an April demand increase of 16%, the fastest monthly increase since December 2011.

At the presentation, Copa CEO Pedro Heilbron said the carrier is working to produce 2017 margins at the high end of the company's 15% to 17% guidance range.

"The economies continue to strengthen in our region," Heilbron said in an interview. "As we implement some of the ancillary revenue opportunities, which we haven't maximized yet, we can see our margins returning to similar to what we had before the economic crisis in Latin America -- that was in the 19% range."

Potential hazards would seem to include stock market cyclicality, growing capacity in Latin America and the threat of a U.S.-imposed laptop ban.

A ban, if one were to be imposed, would likely reduce travel on all carriers. Theoretically, Heilbron said, the impact on Copa and other Latin American carriers would be less than on carriers that carry a higher proportion of business travelers.

"We would be in the same boat as everybody else, but Latin America less than other regions, {due to} more leisure traffic," he said. Still, he said, using an idiom, "Mal de muchos, Consuelo de tontos," which means, "the misfortune of many is the consolation of the stupid."

A key factor in Copa's North American presence is a long-standing code-share partnership with United (UAL) .

"Copa is a great partner and has been ever since the Continental days," said Patrick Quayle, United vice president of international network. Continental once owned 51% of Copa.

United and Copa continue to have extensive code-sharing. In particular, Quayle said, United flies from Newark and Houston to Panama City, and has extensive code-shares beyond Panama City.

From Panama City, Copa offers 160 daily departures to 73 cities in 31 countries. It serves 12 U.S. destinations: Boston, Chicago, Fort Lauderdale, F'a., Las Vegas, Los Angeles, Miami, New Orleans, New York, Orlando, San Francisco, Tampa and Washington.

Five of the 12 U.S. destinations are United hubs, and Copa will add four weekly Panama City-Denver flights on Dec. 11. Heilbron said he does not envision any additional U.S. destinations.

Analysts who attended Copa's investor day were generally positive afterward.

Buckingham Research analyst Dan McKenzie has a buy recommendation and a $147 target price, "with a slightly better performance (vs. their original {margin} guide earlier this year) coming from a faster than expected economic recovery in the region (despite a widening political scandal in Brazil)" and the frequent flyer program, he wrote in a recent report.

"Shares have corrected 10% from a recent high on profit taking following a massive move in the stock over the past year (+159% as of May 11th)," McKenzie wrote.

Cowen & Co. analyst Helane Becker is less enthusiastic, with a market perform rating and a $115 target price. In a note, she cited the strength of Copa's hub at Panama City's Tocumen International Airport, where the carrier has an 80% market share and will gain access to 20 new gates.

Panama's economy is slated to grow 6% this year, Copa is the country's second-largest employer after the Panama Canal, and 71% of Copa's markets have fewer than 20 passengers per day each way, meaning it would be tough for a competitor to provide point-to-point service without the benefit of hub connectivity, Becker said.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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