The Flight Centre Travel Group Ltd (ASX: FLT) share price has had a turbulent 12 months, along with its fellow ASX travel shares. Investors were quick to dump Flight Centre shares as the company came to grips with international and domestic travel being either suspended or restricted.
With COVID-19 vaccines being hastily rolled-out across the world, could the Flight Centre share price be poised to continue its comeback in 2021?
What’s instore for Flight Centre in 2021?
Over the past 12 months, Flight Centre has seen its revenues dive as a result of the pandemic. The business was effectively put in hibernation mode to survive the economic fallout of travel corridors being shut down.
In the time since, management has taken drastic, cost-cutting measures to improve net operating cash flow. In December, the company achieved operating cash outflows of $30 million, compared to $43 million in July 2020.
Furthermore, Flight Centre boosted its liquidity to $1.2 billion as at the end of the calendar year, primarily through issuing convertible notes.
Fast-forward to 2021, the company stated that total transaction value (TTV) is beginning to gradually recover. Revenue margin is expected to increase when low-risk international travel returns. This is forecast to occur around the second-half of 2021.
With the company arguably having sufficient liquidity to weather any unforeseen surprises, it believes positive signs are now starting to emerge. Widespread vaccination roll-outs, along with rapid rebounds in demand when restrictions ease, are projected near-term tailwinds.
After Flight Centre reported its first-half results, Macquarie raised its price target for Flight Centre shares by 31% to $20.00. Morgans followed suit, also lifting its rating by 41% to $19.21. As the current Flight Centre share price sits at $19.44, after having gained 9.2% on Thursday, you could argue it’s fairly valued for now.
But since the pandemic is still far from over, the operating environment for ASX travel companies can still change very quickly, for both better or worse.
Flight Centre share price snapshot
Almost all ASX travel shares are still trading at considerably lower levels than where they were just 12 months ago. In particular, the Flight Centre share price fell from pre-COVID levels of around the $40-mark to now trade at $19.44. That represents a discount of more than 50%.
Based on valuation grounds, Flight Centre commands a market capitalisation of close to $3.9 billion, with approximately 199 million shares outstanding.