Copa Holdings shares surge on analyst upgrade

LOS ANGELES (AP) -- Shares of Copa Holdings SA, the parent company of Panama's national airline, jumped Tuesday after a Deutsche Bank analyst upgraded the company to "Buy," citing strong first-quarter results and an improved outlook for this year.

THE SPARK: On Monday, the company reported that net income for the first quarter jumped nearly 19 percent to $113.8 million, while revenue grew 18 percent to $641.3 million. The number of passengers carried by the airline during the period increased 12.4 percent.

THE BACKGROUND: Copa Holdings provides air transport for passengers and cargo. The company provides service to 64 destinations in 29 countries in the Americas and the Caribbean. Its fleet consists of 86 aircraft.

THE ANALYSIS: Deutsche Bank analyst Michael Linenberg raised his rating on Copa to a "Buy" from a "Hold."

In addition to the main financial performance metrics for the quarter, he also highlighted that Copa's operating margin was 22.2 percent, an increase of 1.7 percentage points from a year earlier. That, Linenberg wrote, marks the return of margin expansion after five consecutive quarters of contraction.

He noted that the company's earnings per share, which exceeded Wall Street's expectations, could be the harbinger of a new earnings trajectory for Copa.

As such, Linenberg raised his full-year earnings per share forecast from $8.75 to $9.65. The consensus forecast by Wall Street analysts calls for 2013 earnings per share of $9.34.

The analyst also boosted his price target on the stock to $150 from $100.

SHARE ACTION: Up 10.29, or 8.2 percent, at $135.29 in afternoon trading. The stock is up 36 percent this year.