The Flight Centre Travel Group Ltd (ASX: FLT) share price has been a strong performer over the last six months.
During this time, the travel agent giant’s shares have rallied an impressive 40% higher.
Why is the Flight Centre share price up 40% in six months?
Investors have been buying Flight Centre shares during this time thanks to the improving outlook for the travel market following the successful development of several effective COVID-19 vaccines.
This has sparked hopes that travel and tourism could return to normal quicker than expected. And with Flight Centre having such a strong balance sheet following its capital raising and cost cutting, it could be in a position to put these funds to work on earnings accretive acquisitions when trading conditions return to normal.
Can the Flight Centre share price go even higher?
According to one leading broker, Flight Centre’s shares could have peaked now.
A note out of Morgan Stanley this morning reveals that its analysts have downgraded the company’s shares to an underweight rating with a $17.50 price target.
This compares to the current Flight Centre share price of $18.44.
Why did Morgan Stanley downgrade its shares?
The broker made the move on valuation grounds after the aforementioned strong gain by the Flight Centre share price.
In fact, the broker notes that Flight Centre’s shares are now trading ahead of pre-pandemic levels when adjusting for its capital raising.
Instead of Flight Centre, the broker believes investors should be buying Qantas Airways Limited (ASX: QAN) shares for exposure to the travel and tourism sector.
Morgan Stanley currently has an overweight rating and $5.90 price target on the airline operator’s shares.
It isn’t alone with that recommendation. This morning analysts at Macquarie upgraded Qantas’ shares to an outperform rating with a $6.35 price target.
Whereas last week Citi upgraded them to a buy rating with a $6.14 price target. This compares to the current Qantas share price of $5.48.