Qantas Airways Ltd (ASX: QAN) shares are catching some headwinds today.
Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed yesterday trading for $10.11. In late morning trade on Friday, shares are swapping hands for $10.04 apiece, down 0.7%.
For some context, the ASX 200 is up 0.4% at this same time.
Taking a step back, it's been a bit of a turbulent ride for stockholders this year.
While Qantas shares remain down 3.9% year to date, the share price is up an impressive 23.7% from the one-year closing lows posted on 23 March.
And according to the analysts at Morgan Stanley, the share price could have much further to run (broker data courtesy of The Bull).
Here's why.
Image source: Getty Images
Qantas shares tipped for Project Sunrise tailwinds
Qantas shares have been attracting a lot of attention amid the pending commercial launch of its Project Sunrise program.
Initially offering flights between Syndey and London, the new service will offer the first-ever non-stop commercial flights connecting Australia's east coast to the United Kingdom.
In a milestone achievement, the first Airbus A350-1000ULR made its maiden test flight between Melbourne and Toulouse, France, earlier this month. Qantas will begin offering commercial passenger flights between Sydney and London in October 2027.
The new Airbus A350-1000ULR will reduce the travel time to less than 22 hours, saving passengers up to four hours compared with the fastest one-stop services available today.
And it will save them more than three days compared to 80 years ago, with the trip taking four days and requiring seven refuelling stops back in 1947.
Qantas will also provide non-stop Sydney to New York flights. The airline will announce the timing of those services next year.
Which brings us back to Morgan Stanley.
Why the ASX 200 airline looks undervalued
Last week, on the heels of Qantas' Project Sunrise investor update, Morgan Stanley highlighted the long-term growth potential of the new international services, along with the benefits to come from Qantas' ongoing fleet renewal program.
The broker estimated that Qantas shares trade on a discount of around 30% compared to other major global airlines. And it noted that the market looks to be undervaluing the transformation of Qantas international travel market.
Morgan Stanley increased its FY 2027 earnings per share (eps) forecast by 5% to $1.01.
The broker maintained its overweight rating and raised its 12-month price target on Qantas shares from $10.60 to $12.50.
That represents a potential upside of 24.5% from current levels.
And it doesn't take into account those Qantas dividends.
Qantas stock trades on a fully-franked 4.6% trailing dividend yield.
