The markets are struggling amid concerns that the coronavirus will weigh on the global markets and interrupt travel. One stock that can be among the hardest hit from that is Air Canada (TSX:AC). Shares of the top airline stock are already down more than 20% over just the past three months and the danger is that things can get a whole lot worse the longer that the virus is a problem.
Air Canada is coming off a terrific year in 2019 when its share price rose 87%. That strong performance may also be part of the reason that investors are more than willing to cash out and secure the gains they’ve earned from holding the stock last year.
However, there’s no denying that Air Canada is due for some soft quarters in 2020 because with travel down, a negative impact on earnings is inevitable. The only question is how big of a drop the company will see in its sales and how its bottom line will look.
Currently, Air Canada is expecting its Q1 results to be about $200 million below last year’s tally, as a result of both the coronavirus and concerns related to the 737 Max. The company’s already coming off a disappointing result in Q4 this month that fell short of analyst expectations.
The longer that these headwinds persist, the worse Air Canada’s results will be these year. And while it may be tempting to buy on the dip, investors may be better off waiting rather than buying Air Canada shares today.
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