Why the heavily shorted Flight Centre share price could be an outperformer: Macquarie

It's been a good day for the ASX travel share yet one broker says the company's upcoming AGM could see its share price lift higher.

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Key points
  • Top broker Macquarie says Flight Centre is among a bunch of ASX 100 shares likely to outperform following their upcoming AGMs
  • Macquarie says “consumer spending has not declined as feared” in Australia and this could help Flight Centre 
  • The Flight Centre share price closed up more than 4% on Tuesday

The Flight Centre Travel Group Ltd (ASX: FLT) share price flew 4.38% higher today to finish at $15.24.

It's been a rocky road for ASX travel shares since the pandemic hit, and the impact continues today.

Add to that rising inflation and interest rates, which are pushing up living costs and dissuading consumers from buying discretionary goods and services, and rising energy prices making air travel more expensive, and you could say ASX travel shares have some headwinds.

In light of this, many investors are feeling uncertain about travel stocks. This is one of the reasons Flight Centre remains the most shorted share on the ASX today.

As my Fool colleague James reported yesterday, Flight Centre has a short interest of 14.75%.

A corporate-looking woman looks at her mobile phone as she pulls along her suitcase in another hand while walking through an airport terminal with high glass panelled walls.

Image source: Getty Images

Broker says AGM could boost Flight Centre share price

According to the Australian Financial Review (AFR), Macquarie reckons Flight Centre could be among the ASX 100 shares to benefit from mini-trading updates at upcoming annual general meetings (AGMs).

The broker thinks the AGMs could provide a positive catalyst for the share prices of companies like Flight Centre, Coles Group Ltd (ASX: COL), Endeavour Group Ltd (ASX: EDV), Downer EDI Limited (ASX: DOW), Charter Hall Group (ASX: CHC), and Origin Energy Ltd (ASX: ORG).

According to the article:

Macquarie said unemployment rates were still very low and "consumer spending has not declined as feared" in Australia and that could also help travel groups such as Flight Centre.

Flight Centre will conduct its AGM on 14 November.

What's the outlook for ASX travel shares?

An update from Qantas last week, which sent its share price soaring 12%, could be a positive indicator for the broader travel sector.

As my Fool colleague Tristan wrote:

Qantas revealed that travel demand remains "strong" across all categories. This sounds good for the wider ASX travel share sector. Revenue intake for business purposes is more than 100% of pre-COVID levels and leisure revenue intake has "further strengthened" to more than 130%.

… Qantas noted that the broader operating environment remains "complex" with high fuel prices and high inflation, as well as higher interest rates hitting consumer confidence.

Even so, the airline believes that "robust demand indicates that people are prioritising spending on travel above other categories", allowing it to recover higher fuel costs through fares.

Motley Fool contributor Bronwyn Allen has positions in Flight Centre Travel Group Limited, Macquarie Group Limited, and Qantas Airways Limited. 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 positions in and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Macquarie Group Limited. 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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