Analysts at Avondale Partners downgrade GOL Linhas Aereas Inteligentes (GOL) from "market perform" to "market underperform." The target price is set to $9.
It's not too late to short more here at $15. Will be a nice and easy trade down to 9
OUCH! I honestly hope the shorts are still alive... I tried to warn you not to short this baby under 15 dollars. It did reach the 14,25 someone said it would, but there is a BIG difference in the prediction of 9 dollars... That forecast could happen but you need a series of tragedies to happen in Brazil regarding airline accidents. This is unlikely these days... I think in fact this baby may start flying high from this point. It just became too cheap...
I was talking about GOL going to single digits when it was around 30. What took these guys so long to wake up. The family that controls GOL are probably thanking their lucky stars that they didn't go ahead with taking the company private when the rumors were flying. With the price of oil where it is, it looks as if there will be a worldwide shakeout in the airline industry. Does anyone remember AMR trading at 4? I do. Goldman Sachs is calling for $175 oil going forward. It's looking like JBLU is headed down the tubes judging from the stock action. None of this should come as any surprise. The airline industry has had a very long history of severe ups and downs.
In my view, the stock is cheap considering the possibilities going forward. It is very hard to predict prices especially when oil is at these crazy levels and the whole market is declining. I guess the smartest argument I heard today was of Rudin, that you should not compare american airlines with GOL or TAM. These are very different animals even if some fundamentals are important for all airlines. The market in Brazil operates on a duopoly and the domestic demand is just starting to increase on an historical basis. So the idea is that Gol is in a good position to capture amazing gains from this increase in demand. When this is going to happen is hard to say. Oil at this level hurts (not so much since the REAL also appreciated) but I have no doubt that Gol will appreciate in value on these levels. I would say it may be even a bargain. Having said that I will not add at this stage to my current position.
"Do your Due Diligence and research what airlines typically trade at on a P/E basis. It ain't 15! And who said the estimates are going to stop at a Buck?"
Are you joking? The historical P/E on airlines is probably a negative number, but Gol isn't a normal airline in the historical U.S. sense.
Here are Gol's, though....
Historical P/E …… High …… Low
2007 …… 85 …… 52
2006 …… 25 …… 14
2005 …… 37 …… 21
2004 …… 36 …… 15
2003 …… 45 …… 22
Who says the earnings are going below $2?
See ya on the way down.
Do your Due Diligence and research what airlines typically trade at on a P/E basis. It ain't 15! And who said the estimates are going to stop at a Buck?
This feels like musical chairs. The music stopped a few months ago, and longs like you are still dancing around as if it's still playing. You'll soon wake up and realize the music has stopped. But I have bad news for you, there won't be any more chairs for you to sit in!
In the meantime, enjoy your Pipe Dream ;-)
Careful with the shorting. Fundamentals are not very good these days for the sector but domestic demand in Brazil is strong which help airlines. These could be seen more for TAM than Gol who is strugling to absorb Varig. In any event, I would not advise shorting at these prices especially if oil reverses down quicly. You could lose money my friend so do not advise others to follow you...
If Domestic Demand is so strong, why are the earnings estimates plummeting? And the latest runup in Oil hasn't been factored into current estimates. You don't want to be long this stock ahead of the next earngings report. It's going to be a nasty quarter (ending March). This stock will drop before the next earnings report, and will drop even more after it. Analysts have been lagging on this one. Watch the estimates drop to a buck after then next quarterly report. On a relative basis, GOL is the most expensive airline in an industry thats just beginning a nose dive. This is a blood bath waiting to happen. I'm short all the way to single digits.