Is the Flight Centre (ASX:FLT) share price a buy after its Q3 update?

The Flight Centre Travel Group Ltd (ASX:FLT) share price is trading lower again today after brokers updated their recommendations…

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The Flight Centre Travel Group Ltd (ASX: FLT) share price was out of form on Tuesday and sank almost 5% following the release of a third quarter update.

Things haven’t been any better today, with the travel agent’s shares down 4% to $15.53 in early trade.

What happened in the third quarter?

According to the release, after a subdued sales period in January and February, Flight Centre achieved record COVID-period sales revenue during the month of March.

It advised that March turnover was more than $100 million higher than February, up 32.7% month-on-month. This took gross quarterly total transaction value (TTV) back above $1 billion for first time since COVID-19.

However, despite this improvement, Flight Centre is still operating at a loss.

As a result, it is expecting its second half underlying loss to be broadly in line with its first half loss in FY 2021. This appeared to disappoint the market, weighing on the Flight Centre share price.

What was the reaction to this?

Brokers have been giving their opinion on this update today and the reaction has been mixed.

Analysts at Macquarie Group Ltd (ASX: MQG) remain positive on the company and have retained their outperform rating. However, the broker has cut its price target by 12.5% to $17.50.

Macquarie believes that Flight Centre’s valuation is supported by strong macro conditions and the expected shift in its sales mix towards the corporate market. It also notes that a recovery in domestic travel is already underway and the recent Australia-New Zealand travel bubble suggests there could be a gradual recovery in international travel.

Citi has responded to the update by upgrading its recommendation to neutral with a price target of $17.30. It notes that Flight Centre’s earnings outlook remains highly uncertain and isn’t expecting the company to breakeven until FY 2023.

Remaining bearish is Morgan Stanley. Its analysts have retained their underweight rating and cut their price target by 8.5% to $16.00. It has concerns over its valuation and notes that its recovery profile is uncertain.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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