What’s the growth runway for Qantas shares in the coming year?

The Qantas Airways Limited (ASX: QAN) share price has tipped into the green this year.

While the S&P/ASX 200 Index (ASX: XJO) has slid nearly 8% since the beginning of the year, ASX travel share Qantas has climbed 3% to $5.31.

Could the Qantas share price reach higher altitudes? Fund manager Perennial has weighed in on the matter. Let’s take a look.

Blue skies ahead for Qantas shares?

Qantas is a holding in the Perennial Value Australian Shares Trust. And the fund’s latest monthly report reiterated its bullish stance.

The report notes:

Qantas (+16.7%) performed strongly as a sharp recovery in travel demand drove a return to profitability in the June half year. The likely ongoing strong demand, combined with capacity constraints, will be supportive of pricing and drive strong profitability into the coming year.

In prior monthly reports, the fund commented that travel is likely to perform strongly as consumer spending shifts from the purchase of goods, which was elevated during lockdowns, to the purchase of services and experiences.

Broker tips more upside for Qantas

Leading broker Macquarie also thinks Qantas shares could take flight. 

Analysts at Macquarie currently have an outperform rating on Qantas, with a 12-month price target of $7.05. This implies a potential upside of 33% from current levels.

According to its recent broker note, Macquarie believes Qantas’ operating environment is attractive with strong travel demand and rational competition. 

Explaining its bullish stance, the broker commented:

We have high conviction in Qantas underpinned by the ongoing travel recovery with the proven ability to pass through higher fuel, along with structural changes to the business through COVID which are yet to be reflected in the share price.

Further, with strong cash generation reflected through balance-sheet repair, Qantas can self-fund fleet renewal & expansion, which look to be value accretive while still providing scope for capital management (ie, recent A$400m buyback).

Qantas share price snapshot

Qantas shares have navigated their way through turbulence to land an 8% gain over the last six months.

But over the last year, shares are still in the red, posting a 2% fall.

The ASX 200 airline recently handed in its FY22 results, delivering an underlying loss before tax of $1.9 billion.

The post What’s the growth runway for Qantas shares in the coming year? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Qantas share price holds firm despite Virgin ‘Switch-A-Roo’ play
• What’s boosting the Qantas share price on Monday?
• Qantas share price ends week in the red despite green update
• Qantas share price edges lower amid Alan Joyce’s $2.3 million FY22 pay packet
• Could you be holding onto ‘zombie’ ASX shares hoping for new life?

Motley Fool contributor Cathryn Goh 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 has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/yTRo3HF