Ready for takeoff? Top broker sees smooth runway for Qantas shares in 2022

Travel stocks are back in the limelight it seems.

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Key points

  • Qantas shares look ready for takeoff in 2022, according to one broker
  • It seems analyst sentiment is overwhelmingly positive for Qantas right now 
  • In the last 12 months, the Qantas share price has climbed 21% into the green

As global travel gradually makes a comeback, travel shares are front and centre with market pundits evaluating their next moves on the sector.

After a return to green territory in 2022, the Qantas share price has managed an 11% gain since trading resumed in January.

Today, Qantas Airways Ltd (ASX: QAN) shares lifted from the open and now trade at $5.56 apiece, up 2.21%.

In wider market moves, the S&P/ASX 200 Industrials Index (ASX: XNJ) is up 1.1% in morning trade on Wednesday.

Are Qantas shares set for takeoff?

Analysts at investment bank JP Morgan are overweight on Qantas shares and value the airline at $6.40 per share.

The broker is constructive on Qantas given current industry headwinds, noting “the airline industry is in the midst of its greatest-ever challenge”.

In a note to clients, JP Morgan said:

Against this backdrop, we see QAN as being well positioned, given…it has taken material costs out of its business, approximately $1 billion p.a. of which are likely to be ongoing savings from FY23 [and] its high proportion of earnings from domestic and loyalty at ~70-75% of earnings.

JP Morgan also likes Qantas’ “strong relative balance sheet positioning; and more favourable competitive position – both domestically and internationally”.

With travel activity and momentum improving domestically, additional international destinations opening and Loyalty continuing to generate cash, we reiterate our overweight recommendation and price target of A$6.40.

Meanwhile, nine other brokers advocate buying Qantas shares at the moment, whereas three rate the company as a hold, according to Bloomberg data.

Just one broker, Credit Suisse, is urging its clients to sell Qantas shares at the minute.

From this list, the consensus price target is $6.32 apiece, suggesting there’s more upside yet to be baked in if this group has Qantas valued correctly.

In the last 12 months, the Qantas share price has climbed 21% into the green on the back of solid gains in 2022.

Motley Fool contributor Zach Bristow 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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