Three Reasons Any J&J Vaccine Pause May Not ‘Derail the Inevitable' for Travel Industry

Johnson & Johnson via Reuters

News that U.S. officials recommended a pause on the use of the Johnson & Johnson Covid vaccine could have a ripple effect on the travel industry and how willing consumers are to take a trip this summer, some investors fear.

Travel stocks have seen a mixed performance – the JETS airline ETF, for example, is down 7% from March highs while online travel agent Booking is just 3% from its own.

BTIG digital services analyst Jake Fuller, who covers stocks such as Booking and Airbnb, does not see a long-term impact from the latest obstacles in the vaccine rollout.

"Any delay in vaccinations will certainly push out a travel recovery a bit, but importantly, it's not going to derail the inevitable," Fuller told CNBC's "Trading Nation" on Tuesday.

Fuller gives three reasons why he remains bullish on the travel industry. The first, he says, is how consumers behaved last year during the height of shutdowns.

"We saw it last summer, you're going to see it again this year, too. People want to get out, people are going to take a vacation," he said.

His second point is that the industry will just adapt. Instead of resorts and airports, people will prioritize home rentals and road trips.  

Lastly, any slowdown this year will be made up for in coming years, he says.

"Whether the vaccine distribution is delayed in the short term or not, it doesn't really derail what we're expecting in the 2022 and 2023 time-frame timeline. Bottom line, we're looking for a full recovery pretty quick, a lot of pent-up demand," said Fuller.

Still, the industry is not without its risks. Other than any resurgence in Covid cases, Fuller says online travel bookings may succumb to the natural business cycle.

"It's a maturing business. So once we get through the recovery phase, I think you're looking at online travel growth looking a lot more like the underlying travel industry, say 3, 4, 5, 6%. It's no longer a 10% to 15% growth industry, and that probably keeps a lid on valuations moving forward," he said.

BTIG has a neutral rating on Booking, TripAdvisor and Airbnb. The firm has a buy rating and $180 price target on Expedia, though, based on bullish market share projections. Expedia's stock closed Tuesday's trading at $51.69 and is up 29% this year.


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