Brokers tip 40%+ upside for Qantas share price

The Flying Kangaroo's shares could have huge upside according to analysts.

| More on:
A woman reaches her arms to the sky as a plane flies overhead at sunset.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Qantas Airways Limited (ASX: QAN) share price had a poor start to the week.

The airline operator's shares ended the day 2% lower at $6.12.

While this is disappointing, it could prove to be a great buying opportunity for investors.

That's because a couple of leading brokers are tipping a major upside ahead for the Flying Kangaroo's shares.

What is being said about the Qantas share price?

According to a note out of Goldman Sachs, its analysts have responded to the company's FY 2023 results by retaining their conviction buy rating with an improved price target of $8.75.

Based on the current Qantas share price, this implies a potential upside of 43% for investors.

Goldman continues to believe that the market is undervaluing the company based on its improved earnings capacity. It said:

Notwithstanding a decline in unit revenues (and group capacity still at 95% of pre-COVID) our estimated FY24e EPS sits 89% above pre-COVID levels. Despite this, QAN's market capitalisation and EV is 1% and 13% lower than pre-COVID levels. We acknowledge broader macro uncertainty at this point in the cycle, but believe the current share price does not reflect the group's improved earnings capacity.

'Risk remains to the upside'

Over at Morgans, its analysts are feeling almost as bullish. They have an add rating and $8.60 price target on the company's shares, which implies a potential upside of 40% over the next 12 months.

Its analysts also believe that the company's shares are dirt cheap at current levels. They commented:

Qantas Airways' FY23 result was a record and all in line with recent guidance provided at its May trading update. The company continues to show confidence in its outlook and balance sheet (despite record upcoming capex spend) with it announcing another A$500m on-market share buyback (above MorgansF of A$400m).

From here, 1H24 guidance likely provided in Oct/Nov will be the key share price catalyst. With QAN trading on its lowest P/E multiple in years (FY24F of 5.4x post buybacks), risk remains materially skewed to the upside. ADD maintained.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Travel Shares

A smiling travel agent sitting at her desk working for Corporate Travel Management
Travel Shares

Up 28% this year, can Flight Centre shares keep on giving in 2024?

Flight Centre shares are amongst the most shorted on the ASX, but the travel stock could be set to surge…

Read more »

Happy couple looking at a phone and waiting for their flight at an airport.
Travel Shares

Why have Qantas shares jumped 7% in November?

The Flying Kangaroo is catching the eye this month with a strong gain. But why?

Read more »

Man sitting in a plane seat works on his laptop.
Broker Notes

Are ASX short sellers right about the Flight Centre share price?

The ASX 200 travel share has been a frequent flyer on the top 10 most shorted stocks list since 2022.

Read more »

Santa sitting on beach looking up best ASX shares to buy on a laptop.
Travel Shares

Can Flight Centre shares reach $20 by Christmas?

We check the ASX travel share's prospects in gaining altitude.

Read more »

A female traveller stands in the terminal, ready to board her plane.
Travel Shares

Is the Webjet share price good value?

Is it time to pick up this travel share? Let's find out.

Read more »

Bored woman waiting for her flight at the airport.
Travel Shares

Qantas share price slips alongside ASX 200 airline's reliability ratings

Qantas shares won’t be getting a lift today from the airline’s latest reliability ratings.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Earnings Results

Webjet shares sink despite 120% half-year profit boost

This travel company delivered stunning growth during the first half. But it wasn't enough for some.

Read more »

asx company executive with multiple fingers all pointing at him
Travel Shares

GUILTY: Qantas shares plunge after criminal conviction

A health and safety representative was sacked after he asked for better protection for staff cleaning planes from China.

Read more »