MENU

Flight Centre share price sinks lower on broker downgrade

The market may be pushing higher on Tuesday, but the same cannot be said for the Flight Centre Travel Group Ltd (ASX: FLT) share price.

In afternoon trade the leading travel agent’s share price is down 3% to $42.14.

Why is the Flight Centre share price sinking lower today?

With no news out of the company, today’s decline appears to be related to a broker note out of Morgans this morning.

According to the note, the broker has downgraded Flight Centre’s shares from an add rating to a hold rating. Its analysts have also trimmed the price target on them by almost 6.5% to $47.75.

This price target still implies potential upside of over 13% for its shares over the next 12 months excluding dividends.

If you included the $1.69 per share dividend that the broker expects Flight Centre to pay this year, this potential return increases to over 17%.

Why did Morgans downgrade Flight Centre’s shares?

The broker made the move after recent industry data pointed to a decline in travel demand from consumers.

Morgans has warned investors that Flight Centre could be impacted by weaker discretionary spending. Which would not be good news given how cost pressures are building.

Should you invest?

Based on Morgans forecast for earnings per share of $2.82 in FY 2019, Flight Centre’s shares are currently changing hands at under 15x estimated forward earnings.

Given this low multiple and the potential return on offer based on the broker’s price target and its dividend, I think Flight Centre is well worth considering right now.

However, I still have a preference for integrated travel company Helloworld Travel Ltd (ASX: HLO) and online travel agent Webjet Limited (ASX: WEB) at current prices. Webjet remains the pick of the bunch for me due to its strong long term growth potential and fair valuation.

Looking for more buy ideas? Here are three buy-rated shares to consider this month.

NEW! Top 3 Dividend Bets for 2019

With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.

Hint: These are 3 shares you’ve probably never come across before.

They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”

We think these 3 shares offer solid growth prospects over the next 12 months. The first two currently offer fat, fully franked yields. The last is a surprising REIT offering you the benefits of being a landlord with none of the hassle! You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."

Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!

The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free copy right now!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia owns shares of Helloworld Limited. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!