The Flight Centre Travel Group Ltd (ASX: FLT) share price may have had an off day on Thursday, but that won't be too deflating for shareholders.
The travel agent giant's shares ended yesterday's session at $20.46. Despite this, the company's shares are still smashing the market with a stunning 41% gain year to date.
Where next for the Flight Centre share price?
Given its strong showing in 2023, you would be forgiven for thinking that the Flight Centre share price had reached its peak.
Far from it, according to analysts at Citi!
According to a recent note, the broker has put a buy rating and $25.50 price target on its shares.
This suggests that its shares could still just under 25% from current levels despite their heroics this year.
What did the broker say?
Citi has been pleased with the company's performance this year and appears relatively confident that it will deliver on the market's expectations thanks partly to its historically low costs. It said:
EBITDA guidance narrowed to $270-290 million. Midpoint of $280 million in line with Visible Alpha consensus of $282 million. Compositionally, expecting revenue margin in line with 1H23 (~10.1%), while underlying cost margin now at historic lows (<9.9%). Note guidance now includes Scott Dunn acquisition of ~$9 million ($210 consideration at 9.6x EBITDA, 5 months contribution), where previously $250-280 million did not.
On the very bottom line, Citi is expecting a profit of $68 million. However, its earnings are then expected to go up a gear in FY 2024, with a profit of $217 million forecast. After which, another jump to $297 million is expected in FY 2025. On an earnings per share basis, this will mean 32 cents, 97 cents, and 132 cents.
Given this positive earnings trajectory, readers may be wondering when the Flight Centre dividend will return. It seems that FY 2023 is likely to be too early, but Citi sees scope for a small dividend in FY 2024 before a return to normal service in FY 2025.
It is forecasting dividends per share of 32 cents in FY 2024 and then 79 cents in FY 2025. Based on the current Flight Centre share price of $20.46, this will mean yields of 1.55% and 3.9%, respectively.
Things certainly are looking up for Flight Centre and its shareholders.
