Tatt Technologies Ltd [NASDAQ:TATT] will be one of the interesting stocks to watch in the next couple of week. A few weeks ago, the company released its Q2 results indicating a drop in revenues when compared to Q2 of 2019.
The CEO attributed this to a decline in activity in the commercial aviation industry. He stated that the industry had been hit hard by the COVID-19 pandemic and this reflected in TAT’s earnings. He added that the cost of COVID-19 on the industry cannot be accurately quantified but it is huge. However, this is set to change soon.
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Recently, the democrats stated that they were working on a $2.2 trillion stimulus package that they would engage republicans on. It is a package that is close to the $1.5 trillion that President had expressed willingness to agree to. Part of the package is a bailout to the aviation industry. As such, if it comes to fruition, the industry would come back to life and so would the revenues and value of this company.
It is also noteworthy that the underlying demand for air travel is still strong despite the pandemic. Data shows that the number of airline trips to nowhere are on the rise, as people catch flights that fly around then get back to their original point. It shows that once the pandemic is fully controlled, travel could return to normalcy. This brings in the second point, which is on a COVID-19 vaccine.
Once a COVID-19 vaccine is found, more people will be willing to travel both for business and leisure. So far, there are multiple companies working on a vaccine with strong government support for these efforts. It won’t take long before a breakthrough is found. One of the most promising vaccine candidates that the world is looking up to is the one by Oxford University and AstraZeneca.
If the late stage tests turn out well and a vaccine comes out successful, then air travel is likely to return, and companies like TATT that are heavily reliant on the industry are likely to do well..
Looking at its price action TATT is showing signs of increased optimism. The stock is currently in a breakout and if it opens the day above Friday’s close, it would be an indicator that bulls are firmly in control. This could see it test new highs in the day, and possibly in the week.
About TAT Technologies Ltd
TAT Technologies Ltd is an aerospace company with a global market presence. It is based in Gedera, Israel.