The Qantas Airways Ltd (ASX: QAN) share price has alternately crashed and soared on the back of COVID-19 developments.
In February and March 2020, during the wider pandemic-fuelled market rout, the Qantas share price cratered by 67%. That was more than double the 32% losses suffered by the S&P/ASX 200 Index (ASX: XJO).
Moving forward to November 2020, when news of effective COVID vaccines broke, we saw Qantas shares soar 32% in less than a month.
More recently, the Qantas share price got another big lift in August this year when Aussie vaccination rates began to take off and the government unveiled its grand reopening plans.
While shares have retraced some 10% since 9 November 2021, investors may be wondering if the airline is still a good recovery buy.
Image source: Getty Images
Is the Qantas share price still a good recovery buy?
To gain some insight into the answer to that question, we defer to Paul Xiradis, head of equities at Ausbil Investment Management.
Looking ahead towards the rest of the 2022 financial year, Xiradis forecasts "another year of strong earnings growth from select cyclicals".
Among those cyclicals, he points to travels shares, including Qantas.
"Post-lockdown, with borders reopening we see positive earning growth outlooks for companies like Qantas," he said.
Discussing Qantas and other "select cyclicals", Xiradis explained:
We are of the view that forward estimates for the next two years will be upgraded, driven by an under-appreciated pick-up in activity beyond COVID lockdowns.
The December quarter '21 is shaping up to be a very strong period, making up for the lockdown-induced slowing in the September quarter. We expect activity levels will remain elevated for the whole of calendar year '22, before it starts its march to trend growth commencing in '23.
But there are risks
As an investor, it's paramount to keep an eye on potential risks to any investment thesis.
For the case of an increasing Qantas share price in the year ahead, the coronavirus remains one of the biggest uncertainties.
According to Xiradis:
Any resurgent re-infection issues or return to lockdowns and border closures would be a concern, however with vaccination rates so high we believe this risk of such is low. Furthermore, the breakthrough of a COVID-19 antiviral pill by Pfizer could be a game changer. There remains a slim risk that not all Australian states will deliver on vaccination targets, but we believe this risk is negligible.
Qantas share price snapshot
The Qantas share price has gained 8% in 2021, trailing the 11% year-to-date gains posted by the ASX 200.
Qantas shares have slipped just under 8% over the past month.
