Shares in airline operator Qantas Airways Limited (ASX: QAN) are inching higher in afternoon trade today, trading less than 1% in the green at $5.08.
With the concept of international travel gradually returning to be within our grasps, investors haven’t rewarded Qantas in the same way – particularly amid the panic that’s ensued as the latest COVID-19 variants are revealed.
With that in mind, let’s check in and see what’s the outlook for Qantas shares in 2022. The markets are talking, and we are listening. So, is it a buy in 2022? Let’s see what the experts think.
Is Qantas a buy in 2022?
The team at JP Morgan certainly think so. The firm recently advocated Qantas to outperform whilst valuing the company at $6.30 apiece.
Analysts at the firm were upbeat from Qantas’ most recent trading update, and reckon this serves as a good springboard for the company coming into 2022.
Not only that, but JP Morgan “still remain[s] comfortable on the prognosis for a domestic aviation recovery”, even if it trimmed its Qantas valuation by 20 cents in the most recent model update.
In the domestic market, JP Morgan sees capacity guidance of approximately 109% over 2H FY22 as “achievable”, underscored by a recovery in leisure and improving corporate travel over 2H FY22.
In contrast, the broker concedes international travel will take time. It reckons international capacity is set to run at 40-55% of FY19 activity during 2H FY22 and likes the emergence of new “non-stop” long-haul routes to Rome.
In its investment thesis, the broker notes that it sees “QAN as being well positioned, given: 1) it has taken material costs out of its business, ~$1billion p.a. of which are likely to be ongoing savings from FY23; 2) its high proportion of earnings from domestic and loyalty at ~70-75% of earnings; 3) its strong relative balance sheet positioning; and 4) more favourable competitive position – both domestically and internationally”.
Meanwhile, the team at UBS reckons that any potential threats to Qantas from new lockdowns and/or border restrictions are well priced into the share price at its current valuation.
The Swiss broker rates Qantas as a buy as well and reckons the airline is well capitalised and better prepared to deal with any further onslaught from COVID-19.
Not only that, UBS reckons Qantas is cheap at its current levels, trading at an approximate 15% discount to historical averages when comparing to peers.
UBS values Qantas at $6.20 per share and rated it as a buy to clients in an update last month.
In the list of analysts covering Qantas that is provided by Bloomberg Intelligence, 84.6% have the airline as a buy, whereas just 1 firm have it as a hold and sell respectively.
Qantas share price snapshot
Due to several disruptions from the pandemic, the Qantas share price has only managed to climb just over 3% in the last 12 months. However, in the past week shares are again in the green, and are flat on the previous month.