Shares in Flight Centre Travel Group Ltd (ASX: FLT) have staged a comeback in 2022 and now trade around 12% higher in that time.
After a solid 11% gain printed in the last month of trade, it appears investors are ready to board the company's flight back north again.
Yesterday's trading volume was in-line with the 4-week average, and checking Bloomberg trade data, the order book is stacked towards the buy-side.
But with the recent upside that's seen shares claw back towards 3-month highs, you'd be surprised to know that analyst sentiment is actually quite low on Flight Centre shares at the moment.
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Sentiment is low – really low
The number of analysts recommending Flight Centre as a buy has crept down substantially over the past 12 months. At the moment, just 14% of coverage rates the company as a buy, whereas the remainder are either neutral or urge their clients to sell shares, according to Bloomberg data.
That's crept down from a high of 71% of analysts saying to buy Flight Centre exactly two years ago, in the midst of the pandemic.
Meanwhile, whilst the consensus price target has crept up from $14.70 back then, it now sits below the current share price at $18.97, suggesting the stock might be overvalued.
Before the open on Thursday, Flight Centre shares were resting at $20.11, after jumping almost 7% in the past week.
What's being said?
Analysts at JP Morgan are in the bearish camp and rate the stock a sell with a $15 per share valuation. Whilst it notes a number of progress points in the company's journey since COVID-19, the broker says there are still a few red flags.
In particular, analysts say that lines of revenue tied to leisure and international travel are likely to be worst hit in Australia & New Zealand.
"1H22 Leisure TTV of $950m was materially below $6,619m in the 1H20 pre-COVID period," it said in a recent note.
"With the business leveraged to the Australia & New Zealand markets (50% of 1H20 group TTV), and with revenue generation skewed to international travel, ongoing restrictions continue to put pressure on the Leisure business," it added.
Corporate lines have also been impacted by COVID-19, but have staged a small recovery as the economy slowly reopens again.
"The Corporate business generated 60% of group TTV, growing at +148% [year on year] to $2,040 million, but faced some pressure on revenue margin due to the Australian hotel quarantine work in November and December", the broker remarked.
JP Morgan is joined by Ord Minnett and Jefferies in its conviction to sell. Meanwhile, Bell Potter rates it as a buy, valuing the company at $20.50 per share in the process.
Flight Centre shares have crept up 12% in the past year and are now trading 14% higher since trading resumed in 2022.
