The Qantas share price is sitting around 40% below its all-time high. Is it a no brainer?

Let's further analyse.

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Key points

  • The Qantas share price has partially recovered from its March 2020 plunge but its still 40% lower than its December 2019 high 
  • Though, the airline is expecting to record positive earnings for this quarter and return to profitability  – with significantly less debt – next financial year 
  • The airline's recovery, its plans for future growth, and its prior decade of growth has plenty of fundies bullish on its share price 

The Qantas Airways Limited (ASX: QAN) share price has suffered over the last two years, but experts are bullish on the stock's future.

Shares in 'the flying kangaroo' reached an all-time high of $7.46 in December 2019. That was mere months before Australia's borders slammed shut amid the outbreak of the coronavirus pandemic.

Its stock tumbled to a multi-year low of $2.03 in March 2020 and has trended upwards since.

As of Wednesday's close, the Qantas share price is $5.31. That's 161% higher than its lowest point of the pandemic but 40.5% below its record high.

Could the S&P/ASX 200 Index (ASX: XJO) airline be taking off to soar at that height again? Let's look at what experts are predicting for the national carrier's stock.

Qantas closes in on return to profitability

The Qantas share price was boosted earlier this month when the airline announced it anticipates it will return to profit next financial year.

The airline told the market it hopes to be earnings before interest, tax, depreciation, and amortisation (EBITDA) positive this quarter. The prediction came after the demand for domestic travel recovered faster than expected.

It also predicted it will post EBITDA of between $450 million and $550 million for the current half.

Finally, the airline's net debt has fallen below pre-COVID levels, sitting at $4.5 billion.

On top of that, Qantas has ordered 12 new Airbus A350's as part of its 'Project Sunrise'. The jets are earmarked to fly non-stop from Sydney to London and New York.  

No doubt many investors are looking forward to the company's recovery over the next few years. And for good reason.

Expert: Qantas share price could double

Northscape Capital portfolio manager and analyst Richard Maynier believes Qantas has tackled most COVID-19 challenges with ease, coming out the other end stronger.

"We think investors will be surprised by how quickly profits rebound … there is good upside in the stock," Maynier was quoted by The Australian as saying.

L1 Capital joint managing director and chief financial officer Mark Landau is also bullish. He thinks the Qantas share price could double if the company meets its financial year 2024 guidance.

"Over the past decade, Qantas has traded at a 40% discount to the ASX Industrials Index. I believe that discount deserves to be smaller today, given Qantas is a better business than it was five or 10 years ago," Landau continued, courtesy of the newspaper.

"It generates a higher return on capital, better cashflow conversion and it generates a much larger proportion of its earnings from its high-growth loyalty division, which warrants a far higher multiple than a traditional airline."

Finally, Barrenjoey Capital Partners analyst Matt Ryan notes the airline has "moved past balance sheet repair and is investing for growth".  

The broker reportedly expects the Qantas share price to reach $6.40 over the next 12 months. That represents an upside of nearly 30%.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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