Flight Centre Travel Group Ltd (ASX: FLT) shares are edging lower on Thursday.
In afternoon trade, the travel agent's shares are down a fraction to $18.46.
This follows a lukewarm response to the company's half-year results release earlier this week.
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Should you buy Flight Centre shares following its results?
Firstly, let's take a step back and look at what the company delivered during the first-half.
Flight Centre reported the tripling of its total transaction value (TTV) to $9.9 billion, a 217% increase in revenue to $1 billion, and a modest $2.4 million underlying loss after tax. The latter was a major improvement on the $188 million loss it recorded a year earlier.
However, as this result was largely pre-released at the end of last month, there wasn't much that wasn't already known. This may explain why investors have responded in the way they have.
So, should you buy Flight Centre shares?
A number of analysts appear to be sitting on the fence right now and are suggesting that investors wait for a better entry point.
For example, Morgans has responded to the results release by reiterating its hold rating with an improved price target of $19.11. This implies modest upside of 3.5% for Flight Centre shares from current levels.
However, the broker does concede that there is potential for material upside if the company delivers on its medium term margin guidance. In fact, it has suggested that Flight Centre could be "extremely undervalued" if it does. The broker commented:
We maintain a Hold rating with a new A$19.11 price target. However we note that if FLT achieves its margin targets in FY26, there is material upside to consensus earnings and the stock is extremely undervalued. Given its changing business mix and different margin profile, execution is the key risk.
All in all, Flight Centre could prove to be a great ASX share to hold onto for the long term if you believe management will deliver on its targets.
