Do you own Qantas Airways Limited (ASX: QAN) shares? If you do, then you will no doubt be hoping for a strong full-year result next week.
But what exactly would be strong? Let's see what the market is expecting from the airline operator on 24 August.
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Qantas FY 2023 results preview
Qantas has given investors an idea of what to expect when it releases its results.
In May, the company provided FY 2023 underlying profit before tax guidance of $2,425 million to $2,475 million. This will be a huge turnaround from a $1,859 million loss before tax in FY 2022.
According to a note out of Goldman Sachs, its analysts are expecting a profit before tax in the middle of the company's guidance range at $2,451 million.
Qantas has also guided to net debt of $2.7 billion to $2.9 billion. Why is this important? Well, that's because Qantas has a net debt target range of $3.7 billion to $4.6 billion. This means it will have a significantly stronger balance sheet than it is targeting.
Goldman Sachs believes this means that management could buy back more Qantas shares. It commented:
We note that this is still well below QAN's ND target range of A$3.7b-A$4.6b, indicating scope for further capital management. In FY24e, we expect ND of A$4.3b on the back of A$800m of buyback and capex of A$3.1b, towards the top end of ND target range (ND of A$3.5b absent the forecast buyback).
Are Qantas shares good value?
Goldman continues to see significant value in Qantas shares at the current level. It has a conviction buy rating and a $8.50 price target on them. This implies a potential upside of 36% from current levels. It concludes:
With the market capitalization 4% above pre-COVID levels and EV (based on last reported net debt) 9% below pre-COVID, we believe the stock is not appropriately pricing QAN's improved earnings capacity.
