Avianca Holdings - A leading airline with strong growth opportunities
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May 5, 2014 (www.investorideas.com newswire) We reinitiated our coverage of Avianca Holdings with a Target Price of USD 20,5/ADR (COP4,950/share) and a BUY recommendation. We consider the airline has strong growth opportunities in the middle and long term given its leading position in the region, the benefits of a fleet renewal program, and positive perspectives for its frequent flyer program; however, we do consider that in the short term the stock's performance will be impacted by the cash trapped in Venezuela, which as of 2013 was 44% of total consolidated cash. Considering that the Airlines Industry is highly dependent on external and uncontrollable variables such as fuel oil prices and FX rates, we calculated our Target Price based on a forward-adjusted EV/EBITDAR multiple approach using our 2014E and 2015E financial estimates.
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