The Flight Centre Travel Group Ltd (ASX: FLT) share price outperformed the S&P/ASX 200 Index (ASX: XJO) yesterday, but can it keep up this momentum for the rest of September?
Wednesday's 3.17% gain may have had something to do with broker Goldman Sachs recently commenting on the Flight Centre share price, as covered by my colleague, James Mickleboro.
In addition, fellow ASX travel share Webjet Limited (ASX: WEB) yesterday disclosed a positive trading update, which suggests the battered travel industry is bouncing back.
Let's take a closer look at what brokers had to say about Flight Centre.
Brokers' thoughts on Flight Centre
Based on a note from Goldman Sachs, the broker was quite surprised by the strong recovery in Flight Centre's earnings in Australia and New Zealand.
However, the broker expected more growth in America, which was impacted by a more unfavourable mix of flights.
Goldman Sachs held onto its neutral rating with a reduced price target of $19.60. That implies a potential upside of almost 15%.
In a further possible boost for the Flight Centre share price, it appears Goldman Sachs considers the travel industry as a whole is heading in the right direction.
According to a note out of the investment bank from this morning, it believes the Webjet share price can continue its upward trajectory after keeping its buy rating at a reduced price target of $6.80. That suggests a potential upside of 23% over the next 12 months.
Webjet also flagged in its trading update that it expects earnings in FY24 to exceed levels seen pre-pandemic. It anticipates broader travel market activity is expected to return to 2019 levels.
Another broker, Morgans, was also positive on Flight Centre. It holds a lower price target at $18.25, supported by a hold rating. This broker believes the Flight Centre share price is fair given the risks the travel agency is facing.
It was also announced yesterday that substantial shareholder JP Morgan Chase increased its shareholding of Flight Centre. So, this may also have contributed to the uptick in the Flight Centre share price.
Additionally, the travel agency's shares gained 3.52% on Tuesday amid rumours the company is considering the acquisition of US travel management company Altour International.
Flight Centre share price snapshot
At the time of writing, Flight Centre shares are down 1.12% to $17.70.
In the last year, it has risen by almost 4% and is up 3% in the past month. The ASX 200 has fallen by 9% in the last year and is down around 2% in the last month.
The overall sentiment towards the Flight Centre share price appears to be becoming more positive. However, a lot of this optimism is being held back with measured caution, given how quickly things can change.
Travel agencies are more exposed to external factors than the average business, making it more difficult to forecast future earnings. But they can be sound cyclical plays when optimism hits rock bottom — it's a matter of assessing when the bottom is, though.
Flight Centre has a market capitalisation of around $3.58 billion.
