What happened
The travel market in Brazil has taken longer to recover from the pandemic than in other parts of the world, but investors are warming to the idea that the worst is finally over. Shares of Azul (NYSE: AZUL), one of the nation's largest airlines, traded up as much as 5% on Monday after the stock was upgraded by UBS.
So what
The airline industry was hit hard by the pandemic, and Latin American airlines have had more trouble than most. Azul managed to navigate the crisis without a bankruptcy filing, but the company has had trouble getting airborne as the Brazilian economy has been slow to recover.
Azul gave Wall Street a pleasant surprise last week when it reported progress working out deals with its creditors that should help it become cash-flow positive in 2024. The shares jumped more than 50% on the news, and in the days that have followed, analysts have warmed to the stock (which trades both in New York and in Brazil).
On Monday, UBS upgraded Azul from a sell to a neutral and boosted its price target from 12.50 reals to 14 reals ($2.65). It is at least the second upgrade in recent days, following Morgan Stanley's move to equal weight from underweight thanks to the bank's newfound belief that Azul will have the cash it needs to weather the storm.
Even after the recent jump, shares are still well off their pre-pandemic levels, but the endorsement from analysts that the danger surrounding the stock is diminishing has kept the shares moving higher.
Now what
Azul is heading in the right direction. The big question for investors is how long it will take for the airline to reach its destination.
The company has seen domestic demand return, and there are some encouraging signs that international travel is beginning to return as well. We're still in the early days of a recovery, but for investors with the patience to ride out the turbulence, Azul is a well-run carrier and a top choice among Latin American airlines.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
