tiprankstipranks
As Air Canada Rebuilds, ACDVF Stock Could Take Flight
Stock Analysis & Ideas

As Air Canada Rebuilds, ACDVF Stock Could Take Flight

The COVID-19 pandemic hit many economic sectors hard – particularly airlines, which continue to struggle to this day. As a result, Air Canada (ACDVF) has embarked on a long, difficult journey to recovery.

To achieve this objective, Air Canada has vowed to focus on multiple aspects of its business. These include reducing costs, expanding margins, engaging customers, and fostering a positive culture change.

Now, it’s unrealistic to expect that ACDVF stock is going to stage a full recovery to pre-pandemic levels in the near future. As we’ll see, the company’s per-share earnings are in a heavily depressed state. (See Air Canada stock charts on TipRanks)

But fear not, intrepid Air Canada investors, as it’s not all bad news. As the world re-opens, Air Canada is expanding its geographic reach – and hopefully, putting the pieces back together after a rough year.

A Quick Look at ACDVF Stock

The first thing to note is that ACDVF is the “Americanized” version of Air Canada stock. It trades on the OTC market, and should be tradable via many (though not necessarily all) popular U.S.-based brokers. Air Canada is also tradable on the TSE (Toronto Stock Exchange) under the ticker symbol AC.

This is important because on Monday, July 5, you could actually see the Canadian AC stock moving, while the American ACDVF stock stood still (as the U.S. markets were closed).

In any case, there is an area of concern with ACDVF stock. As of July 2, it was priced at $21.01. At the same time, the trailing 12-month price-to-earnings ratio was -$13.13. That’s definitely a problem which needs to be solved – the sooner, the better.

Next, there’s a date and time to mark on your calendar: Friday, July 23, 2021, at 8:30 a.m. Eastern Time. That’s when Air Canada’s second-quarter results will be released, and this event could significantly impact the ACDVF stock price.

Perhaps this event will help ACDVF stock get back to the pre-pandemic high of $39. Investors should just be aware that there’s still a long way to go, and we shouldn’t count on a full recovery happening in a single day.

Strategically Rebuilding: Montreal-Egypt Route

If you need proof that Air Canada is branching out geographically, a recent press release ought to do the trick. Reportedly, Air Canada commenced non-stop service between Montreal, Canada, and Cairo, Egypt.

This should give a boost to Air Canada’s business while also serving the large Egyptian community that’s established in Montreal; plus, this will provide an additional gateway to Africa.

Mark Galardo, senior vice president of Network Planning and Revenue Management at Air Canada, recognizes the opportunity here, as there are “few non-stop options to Egypt from North America.”

With this flight-schedule addition, Galardo asserts that Air Canada is “strategically rebuilding” its “international network by adding new routes that support leisure and visiting friends and family travel.”

A New Digital Solution for COVID-19

The aforementioned geographic expansion isn’t the only positive sign for Air Canada.

As it turns out, the airline is trying something innovative and tech-enhanced: a new digital solution that’s available through Air Canada’s mobile app for customers to scan, upload, and verify their COVID-19 test results.

This is something that, frankly, more airlines should try out. It can help to make the boarding process quicker and easier.

Air Canada isn’t a technology business, of course, so the airline developed the COVID-19 test result verification solution with the support of Amadeus (AMADY), a travel technology company. This solution was available starting June 29 for flights from Frankfurt to Toronto and Montreal.

Plus, Air Canada plans to roll out the technology across its network later this summer, though this is pending results of the trial. The airline is also looking to introduce new capabilities so that customers can also pre-validate their proofs of vaccination.

Wall Street Weighs In

According to TipRanks’ analyst rating consensus, ACDVF is a Moderate Buy, based on 6 Buy and 3 Hold ratings. The average Air Canada price target is $24.50, implying 16.61% upside potential.

The Takeaway

Make no mistake about it: Air Canada will have to work diligently to adapt to the “new normal,” not to mention returning to pre-pandemic conditions.

Still, there’s hope for a recovery as Air Canada not only expands geographically, but also demonstrates a willingness to innovate as the airline serves its clients, as well as its shareholders.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles