The Qantas Airways Limited (ASX: QAN) share price has continued to ascend on Friday.
In morning trade, the airline operator's shares are up 3% to $5.79.
This means the Qantas share price is now up 12% over the last two trading sessions.
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Why is the Qantas share price taking off?
Investors have been scrambling to buy shares this week after Qantas surprised the market with a particularly strong update.
Based on forward bookings, current fuel prices, and latest assumptions about the second quarter, Qantas revealed that it expects underlying profit before tax of between $1.2 billion and $1.3 billion for the first half of FY 2023.
Qantas also advised that its balance sheet was stronger than expected. It now expects its net debt to fall to between $3.2 billion and $3.4 billion at 31 December, which is below the bottom of the target range of $3.9 billion.
This update blew away analysts at Citi. They commented:
Almost embarrassingly large beat to us and the market, with QAN expecting a full year's PBT in a half. Quickly looking at passengers travelled in August, interestingly both domestic and international were actually down compared to July (albeit seasonality), implying what we think is a result largely driven by yields. Our back of the envelope suggests yields at a group level were ~35% higher than a couple months ago.
Can its shares keep climbing?
The good news for shareholders is that a number of leading brokers believe the Qantas share price can keep rising from here.
For example, according to a note out of UBS, its analysts have retained their buy rating and lifted their price target on the company's shares to $7.20. This implies further potential upside of 24% for investors.
The team at JP Morgan is even more positive and has retained its overweight rating with an improved price target of $7.50. This suggests potential upside of almost 30% for investors.
Morgan Stanley agrees with JP Morgan and has retained its overweight rating and $7.50 price target.
Finally, over at Citi, its analysts have taken their sell rating off the company's shares and upgraded their recommendation to neutral and lifted their price target to $5.78. This would indicate that Qantas shares are fully valued now. However, as you saw above, Citi has been very wrong with its view on Qantas this year, so it may not be the most reliable recommendation at this point.
