With demand expected to be down as a result of travel fears due to the coronavirus, it could be a challenging year for Air Canada, depending on how long it takes to control the virus. Even then, there’s likely going to be some time before people feel comfortable travelling again.
The benefit that the stock could gain is from lower oil prices but there’s talk that Saudi Arabia is looking at more drastic cuts to help keep prices up.
That means that not only may Air Canada see fewer travelers this year but it may not get much help from oil prices in offsetting some of the impact to its financials. Given these headwinds, it wouldn’t be surprising to see shares of Air Canada continue to fall in 2020.
Although the stock isn’t an expensive buy, trading at 11 times earnings, the problem is that the with the year being a big question mark, investors may be waiting for more of a dip in price before buying the stock.
Air Canada is still an excellent long-term buy given its dominance in the industry but there could be a lot of bearishness surrounding the stock this year and that’s why investors may want to wait, especially given how high the stock has soared over the past few years.