Much to the dismay of short sellers, Flight Centre Travel Group Ltd (ASX: FLT) shares have been on fire this year.
Since the start of 2023, the travel agent giant's shares are up over 46%.
Where next for the Flight Centre share price?
Unfortunately for those that are shorting the company, Morgans is tipping its shares to rise even further over the next 12 months.
This is due to its analysts' belief that the travel agent is on the cusp of "an earnings upgrade cycle which may continue for the next few years."
In light of this, the broker currently has an add rating and $26.25 price target on the travel agent's shares.
Based on the current Flight Centre share price of $21.22, this implies potential upside of approximately 24% for investors.
What else did the broker say?
Morgans has been impressed with Flight Centre's recovery from the pandemic and believes the company is well-placed for strong earnings growth in the coming years. This is thanks to pent-up demand and its low cost base. It commented:
FLT's group cost margin is now at an historic low reflecting permanent and structural cost base changes and growth in lower cost and highly scalable models (Independents and Online).
With greater confidence in the travel recovery and the benefits of FLT's transformed business model starting to emerge, we think FLT is now at the cusp of an earnings upgrade cycle which may continue for the next few years. We have upgraded our forecasts and move to an Add rating with our new SOTP valuation of A$26.25.
All in all, the broker appears to believe this makes Flight Centre shares great value despite their heroics so far in 2023.
