The Flight Centre Travel Group Ltd (ASX: FLT) share price has taken a beating over the past year.
The travel operator has faced intense pressure from online travel agencies and shifting market dynamics. This has caused a lacklustre financial performance and, therefore, a decline in its share price.
At the close of the ASX on Tuesday, Flight Centre's share price was in the green after rising 1.47% to $12.40 for the day.
But the rebound comes following several months of losses. Over the past month, the Flight Centre share price is 7.12% lower, 29.71% lower over the past six months, and 39.07% lower over the past year.
While the trend paints a disappointing picture, analysts are confident that the company is now attractively valued and are optimistic about its future.
Image source: Getty Images
What happened to Flight Centre shares?
Flight Centre released a first-quarter (Q1 FY 25) trading update in mid-October, highlighting that total transaction value (TTV), profit margin, and underlying profit were only "marginally above" Q1 of FY 24.
Management also warned that trading had been volatile, with "some inconsistency month-to-month", with full guidance deferred until the November AGM.
The announcement sparked an investor sell-off, which saw shares tumble 20.5% overnight.
Soon after, at its annual general meeting in November, the company signalled that earnings would shift heavily into the second half. Underlying profit before tax was expected to be between A$365 million – $405 million, implying roughly 20% growth over FY24.
CEO Graham Turner said he was "heartened by a marked recovery in October across our key metrics of TTV, profit and profit margin". This follows what he described as a "patchy first quarter".
Fast-forward to February, and the ASX 200 travel share reported a sharp 31% decline in its net profit after tax for the first half of the year. Later in April, Flight Centre downgraded its FY25 profit guidance, citing short-term volatility following uncertain trading conditions.
Investors were still spooked. Since the February announcement, the Flight Centre share price has fallen another 30%.
Is a U-turn ahead?
Despite the smashed-up share price, Flight Centre shares could transform $10,000 into $16,730 over the next 12 months.
Here's why.
Macquarie thinks the market is already pricing in near-term softness and that FY26 could be the year Flight Centre finally takes off. The broker believes the current share price undervalues the long-term structural improvements in the business.
In a recent investor note, it confirmed its outperform rating on the stock and a 12-month target price of $15.20. At the time of writing, that represents a potential 22.6% upside.
Macquarie isn't the only analyst optimistic on the stock either. According to TradingView data, 13 out of 18 analysts hold a buy or strong buy rating on Flight Centre shares. The consensus view is a 12-month price target of $15.36, while the maximum price target assigned is $20.75.
That represents an upside of 23.8% to as high as 67.3%!
