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.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price closed at $18.25 yesterday, down 1.78%.

The ASX travel share has delivered a fluctuating share price performance in the year to date.

As you can see below, the Flight Centre share price had a great run between January and the end of July, rising by more than 60%.

It then floundered amid general investor concerns that high inflation and interest rates would eventually lead to a pullback in discretionary consumer spending.

Since 1 August, the Flight Centre share price has lost almost 22% of its value to sit where it is now.

And it seems a proportion of pro traders expect the stock to fall further, given the short position today.

Flight Centres shares remain among the top 10 most shorted stocks on the ASX.

They've been shorted for quite some time, however, their short position has reduced somewhat.

According to the latest ASIC data, 9.35% of the ASX 200 travel stock is short-sold. This compares to 14.3% in the first week of January.

Flight Centre shares were the most shorted stock for almost the whole of 2022.

So, are the short sellers of today right?

Let's check out the latest news from the company and a few views from the big brokers.

What's the latest news from Flight Centre?

At the company's annual general meeting on 15 November, management gave a 1Q FY24 update.

As my colleague James reported, Flight Centre's total transaction volume (TTV) in 1Q marked the second-strongest start to a year in the company's history.

TTV came in at $6 billion, up 20% year over year. Pre-pandemic, the TTV was about $6.2 billion.

Underlying profit before tax soared by 500% to $54 million at a margin of less than 1%. And earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased threefold to $102.3 million.

Flight Centre is guiding underlying profit before tax for the full FY24 year to come in between $270 million and $310 million.

As James points out, if a midpoint of $290 million is achieved, that would be a 175% increase on FY23.

The company is also guiding underlying EBITDA to finish between $460 million and $500 million for the full year. At the midpoint, that would represent a 60% rise.

Flight Centre is expecting a full industry recovery from COVID-19 in the 2024 calendar year.

What do the brokers think of the Flight Cente share price?

So, what do some of the big brokers think of the Flight Centre share price as it stands today?

Well, Morgans is pretty bullish on the price.

The broker reckons the Flight Centre share price can go as high as $26 over the next 12 months. That's its official price target for the ASX 200 travel stock.

In a recent note, Morgans said the company has a "more efficient and profitable new business model".

The broker commented:

Given we forecast a strong recovery over coming years, we have made only minor changes to our forecasts. However we note that there is substantial upside to consensus estimates if FLT achieves its 2% margin target in FY25.

With confidence that the travel recovery has much further to go and the benefits of FLT's transformed business model emerging, we think the company is well placed over coming years. We maintain an Add recommendation.

UBS is neutral on Flight Centre shares and has a 12-month price target of $23.45.

Macquarie recently retained its outperform rating on Flight Centre with a trimmed price target of $22.15.

Motley Fool contributor Bronwyn Allen has positions in Flight Centre Travel Group and Macquarie Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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