The Flight Centre Travel Group Ltd (ASX: FLT) share price was well and truly out of form in 2020.
The travel agent giant’s shares were among the worst performers on the S&P/ASX 200 Index (ASX: XJO) with a whopping 60% decline.
Why did the Flight Centre share price crash lower in 2020?
Investors were of course selling the travel agent’s shares due to the negative impact the coronavirus pandemic was having on bookings.
With travel markets coming to a standstill at the height of the pandemic, Flight Centre was left generating next to no revenue and still had considerable operating costs to pay.
This led to the company having to undertake a material capital raising, which diluted shareholders, to give it the liquidity it needed to survive the crisis.
It also resulted in the company delivering a huge loss in FY 2020. For the 12 months ended 30 June 2020, Flight Centre reported an underlying loss before tax of $510 million. This was before one-off items, including COVID-19 induced expenses of $339 million.
On a statutory basis, Flight Centre delivered a loss of $849 million before tax.
Will 2021 be better for the Flight Centre share price?
One leading broker that believes Flight Centre’s shares could be market beaters in 2021 is Bell Potter.
This morning it retained its buy rating and $19.00 price target on the company’s shares. This price target implies potential upside of approximately 20% over the next 12 months.
Although the broker acknowledges that there is a lot of uncertainty in the short term because of COVID-19, it remains very positive on the future. Bell Potter is particularly positive on its corporate business and expects this to be the key driver of growth over the long term.
It also believes that the company will eventually restore its earnings at higher margins. This is due partly to the removal of structural costs.
This could make Flight Centre one to watch in 2021.
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More reading
- Bell Potter names the ASX shares to buy in 2021
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- 2 important investment lessons from 2020
- The 5 worst performing ASX 200 shares of 2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post The Flight Centre (ASX:FLT) share price dropped 60% in 2020: Will 2021 be better? appeared first on The Motley Fool Australia.
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