Qantas Airways Ltd (ASX: QAN) shares are cruising in the green today.
Shares in the S&P/ASX 200 Index (ASX: XJO) airline closed yesterday trading for $8.12. In early afternoon trade on Tuesday, shares are changing hands for $8.145 apiece, up 0.3%.
As you can see on the chart below, this sees the airline stock up more than 69% since this time last year.
That's a very tidy gain for shareholders.
But with the airline potentially facing some headwinds ahead, Bell Potter Securities' Christopher Watt (courtesy of The Bull) believes now is a good time to take some of those profits off the table.
Time to sell those soaring Qantas shares?
Explaining his sell rating on Qantas shares, Watt said:
The company posted statutory profit after tax of $1.25 billion in fiscal year 2024, down 28% on the prior corresponding period. The operating margin was 10.4% in fiscal year 2024 compared with 13.5% in fiscal year 2023. Net debt of $4.1 billion was within the target range.
The airline business, by its very nature, can be volatile as its exposed to unpredictable external and economic events. Qantas shares have risen from $5.78 on August 5 to trade at $7.925 on October 24. Investors may want to consider cashing in some gains at these levels.
At the current $8.145 a share, Qantas stock is up 2.8% since 24 October, upping the gains for investors who opt to cash in some of those shares today.
What's been happening with the ASX 200 airline?
Qantas reported its full year FY 2024 results on 29 August.
Although revenue was up 10.7% from FY 2023 to $21.9 billion, slumping earnings were driven by its Qantas Domestic and Qantas International businesses.
Earnings (before interest and tax) fell 16% to $1.06 billion for Qantas Domestic while Qantas International saw earnings decline by 39% to $556 million. The hit to earnings was said to be caused by increased market capacity and decreasing revenue from the airline's freight business.
On the plus side for Qantas shares, its Jetstar Group segment reported a 23% increase in underlying earnings to $497 million, while Qantas Loyalty earnings of $511 million were up 13% year on year.
"Our strong financial performance and balance sheet will allow us to continue to invest in our largest ever fleet renewal program, which will benefit our customers and people, as well as delivering shareholder returns," Qantas CEO Vanessa Hudson said at the time.
Qantas shares closed up 0.8% on the day.
