Flight Centre Travel Group (ASX: FLT) may be grounded for now, but analysts at Macquarie think it could soon be cleared for takeoff (Flight dad jokes incoming!).
Macquarie has an outperform rating on Flight Centre and set a 12-month price target of $15.20, implying a 25% total shareholder return (including dividends) from the current price of $12.18 (at the time of writing).
That's despite Flight Centre issuing a disappointing FY25 trading update. Profit guidance was downgraded due to weaker-than-expected trading conditions and ongoing drag from its Asian operations.
So why is Macquarie optimistic?
Macquarie argues that the market is already pricing in near-term softness and that FY26 could be the year Flight Centre finally takes off.
While Flight Centre lowered its FY25 underlying profit before tax (UPBT) guidance to $285–$295 million (down from $300–$335 million), trading is already stabilising into the new financial year.
A rebound in activity across key corporate and leisure segments is expected to drive better operating leverage and earnings momentum in FY26.
Why FY26 could change the narrative
Flight Centre has a few tailwinds working in its favour:
- Improving corporate travel performance, especially in the US.
- Cost control and lower capex, which could drive operating leverage.
- Broader travel activity recovering post the US/Middle East disruption that hurt second-half FY25 bookings.
Macquarie also notes Flight Centre's Corporate segment now contributes over 50% of group earnings, up from ~20% back in 2010. That's important, as it helps justify a valuation re-rate over time.
Valuation: Upside with margin for error
Macquarie's $15.20 target is based on a sum-of-the-parts (SOTP) valuation using a 7.4x forward EV/EBITDA multiple, which is in line with long-term historical averages.
When you consider that the corporate segment generally commands a higher multiple and is becoming a bigger part of Flight Centre's business, there is potential for the market to re-rate Flight Centre's valuation higher.
Overall, while FY25 earnings were revised down, Macquarie believes the current share price undervalues the long-term structural improvements in the business.
Foolish Takeaway
Flight Centre has had a turbulent year. At the time of writing, the share price is down 26% so far in 2025, but Macquarie's call is a reminder that sentiment moves faster than fundamentals.
If travel trends normalise and the company executes on its strategy, FY26 could mark the beginning of a more sustained climb.
It may not be flying high yet, but Macquarie believes Flight Centre's next destination is higher.
