News that US officials have recommended a break in using Johnson & Johnson Covid vaccine could impact the travel industry and how willing consumers are to take a trip this summer, fear some investors.
Travel stocks showed mixed performance – the JETS Airline ETF, for example, is down 7% from its March high, while online travel agency bookings are only 3% different from their own value.
Jake Fuller, digital services analyst at BTIG, who covers stocks like Booking and Airbnb, sees no long-term ramifications from recent barriers to vaccine adoption.
“Any delay in vaccinations will certainly make the trip recover, but most importantly, it will not derail the inevitable,” Fuller told CNBC’s Trading Nation on Tuesday.
Fuller gives three reasons why he remains optimistic about the travel industry. The first, he says, is how consumers have behaved during the height of the shutdowns over the past year.
“We saw it last summer, you will see it again this year. People want out, people are going on vacation,” he said.
His second point is that the industry will only adapt. Instead of resorts and airports, people will prioritize home rentals and road trips.
After all, any slowdown this year will make up for in the years to come, he says.
“Whether or not the vaccine distribution is delayed in the short term, it doesn’t really derail from what we expect in the 2022 and 2023 timeframes. The bottom line is that we’re aiming for a full recovery pretty quickly, a much pent-up demand,” Fuller said .
However, the industry is not without its risks. Unlike any revival in Covid cases, Fuller says, online travel bookings could be subject to the natural business cycle.
“It’s a mature business. So when we go through the recovery phase you see the growth of online travel much more like the underlying travel industry, say 3, 4, 5, 6%. It’s not a 10% to 15% % Growth industry, and that’s likely to hold up ratings in the future, “he said.
BTIG has a neutral rating for booking, TripAdvisor and Airbnb. However, the company has a buy rating and a target price of $ 180 on Expedia based on bullish market share projections. Expedia stock closed Tuesday at $ 51.69, up 29% for the year.