Flight Centre Travel Group Ltd (ASX: FLT) shares have started the week positively.
The travel agent's shares beat the ASX 200 and ended the day 1.5% higher at $18.00.
This means the Flight Centre share price is now up 25% since the start of the year.
Should you buy Flight Centre shares ahead of its results?
While buying ASX 200 shares before the release of a result can be a bit risky, Flight Centre has already provided the market with an unaudited preview of its half year results.
In light of this, there's not likely to be any surprises when the company releases its full set of results later this month.
So, should you buy shares?
Unfortunately, I'm not aware of any brokers that have a buy rating on Flight Centre shares at present. The most positive broker is arguably Morgans, which has a hold rating and $18.10 price target on its shares.
This is broadly in line with where the Flight Centre share price is currently trading, which appears to indicate that investors might be best keeping their powder dry and waiting for a better entry point.
What did the broker say?
Morgans was reasonably pleased with the company's proposed acquisition of luxury travel company Scott Dunn. It was even more pleased with its performance during the first half. It said:
While the acquisition of Scott Dunn ticks the boxes strategically, FLT has paid a full price and it is only mildly EPS accretive based on recovery year earnings. Importantly, Flight Centre Travel's 1H23 result has beaten guidance, led by a strong Corporate result.
One slight negative, though, is that despite the first half beat, its FY 2023 guidance has fallen short of the broker's expectations. It explained:
FLT has provided FY23 EBITDA guidance of A$250-280m. This was below Morgans previous forecast of A$289.5m. However it was largely at the midpoint of FactSet consensus of A$266.3m. This guidance is prior to any benefits from the acquisition. The midpoint of guidance implies a 35%/65% 1H vs 2H split, which is broadly in line with FLT's historical seasonality.
Finally, while the broker isn't recommending Flight Centre as a buy, it is encouraging existing shareholders to take part in the company's capital raising. It concludes:
We view the placement and SPP price as attractive (FY25 recovery PE of 11.7x) and encourage investors to take up their allocation. We maintain a Hold rating with a new $18.10 price target.
