The news that U.S. officials recommended pausing the use of the Johnson & Johnson Covid vaccine could have a ripple effect on the travel industry and consumer readiness to travel this summer, some investors fear.
Travel stocks have shown mixed performance – the JETS airline ETF, for example, is down 7% from its March highs, while online travel agent Booking is only 3% of its home country.
Jake Fuller, BTIG’s digital services analyst covering stocks like Booking and Airbnb, sees no long-term impact from the latest hurdles to vaccine rollout.
“Any delay in vaccinations will certainly delay a travel recovery a bit, but more importantly, it won’t 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 behaved during the height of shutdowns last year.
“We saw it last summer, you will see it again this year. People want to go, people are going on vacation,” he said.
His second point is that the industry will just adapt. Rather than resorts and airports, people are prioritizing home rentals and road trips.
Finally, any delay this year will be offset in the coming years, he says.
“Whether the distribution of the vaccine is slowed down in the short term or not, it doesn’t really derail what we expect in the 2022 and 2023 timeline. In short, we’re looking for a pretty quick full recovery, a lot of pent-up demand,” Fuller said.
Yet the industry is not without risks. Aside from some resurgence in Covid cases, Fuller says online travel bookings could succumb to the natural business cycle.
“It’s a business that is maturing. So once we get through the recovery phase, I think you’re looking at the growth of online travel that’s much more like the underlying travel industry, say 3, 4, 5, 6%. is no longer a 10% to 15% growth industry, and that is likely to keep valuations under pressure, ”he said.
BTIG has a neutral rating on Booking, TripAdvisor and Airbnb. However, the company has a buy rating and a price target of $ 180 on Expedia, based on bullish market share forecasts. Shares of Expedia closed Tuesday’s trading at $ 51.69 and are up 29% this year.