The Australian share market may be dropping today but that hasn’t stopped the Flight Centre Travel Group Ltd (ASX: FLT) share price from storming higher.
At the time of writing, the travel agent’s shares are up 6.5% to $18.67.
This compares very favourably to a 0.4% decline by the S&P/ASX 200 Index (ASX: XJO).
Why is the Flight Centre share price storming higher?
The catalyst for the rise in the Flight Centre share price on Tuesday has been a bullish broker note out of Credit Suisse this morning.
According to the note, the broker has upgraded the company’s shares to an outperform rating with an improved price target of $19.00.
Based on the Flight Centre share price at Monday’s close of $17.50, this implied potential upside of 8.6% over the next 12 months.
However, with the company’s shares storming higher today, the upside is now a more modest 1.8%.
Why did the broker upgrade Flight Centre?
Credit Suisse upgraded the Flight Centre share price from a neutral rating to an outperform rating for a number of reasons.
One of those was the positive progress Australia is making with the vaccine rollout. This is expected to support the travel market recovery and underpin its return to break-even.
In addition to this, the broker is a big fan of Flight Centre’s corporate business. It notes that the high quality business has been winning market share and appears to believe this trend will continue.
What about its rivals?
Unfortunately, Credit Suisse isn’t as positive on the Webjet Limited (ASX: WEB) share price. This morning it downgraded the online travel agent’s shares to a neutral rating with a $5.70 price target.
While the broker sees significant upside if Webjet delivers on its cost reduction targets, it isn’t enough for a more positive rating. This is due largely to valuation reasons.
Nevertheless, this hasn’t stopped the Webjet share price from climbing almost 1% today.
The post Flight Centre (ASX:FLT) share price storms 6% higher on broker upgrade appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. 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.
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