Leading broker tips Qantas share price to climb to a new record high

view from below of jet plane flying above city buildings representing corporate travel share price

view from below of jet plane flying above city buildings representing corporate travel share price

The Qantas Airways Limited (ASX: QAN) share price is pushing higher again on Thursday.

In morning trade, the airline operator’s shares are up 3% to a new 52-week high of $6.36.

This means the Qantas share price is now up almost 24% since the start of the year.

Can the Qantas share price keep ascending?

The good news for investors is that one leading broker believes there’s significantly more upside ahead for the Qantas share price.

According to a note out of Goldman Sachs, its analysts have responded to yesterday’s profit guidance upgrade by reiterating their conviction buy rating with an improved price target of $8.20.

This price target implies potential upside of 29% for investors over the next 12 months and would represent a record high for the airline’s shares.

What did Goldman say?

Goldman was impressed with the update and believes the market is valuing the Qantas share price too cheaply given its improved earnings capacity. The broker said:

With the market capitalization 5% above pre-COVID levels and EV (based on last reported net debt) 12% below pre-COVID, we believe the stock is not appropriately pricing QAN’s improved earnings capacity. Specifically, our forecast FY23e EPS is 58% above FY19a levels with group capacity still 21% below pro-COVID levels. Even as the yields moderate (with capacity restoration) our FY24e EPS (100% of FY19 capacity) is 46% above FY19 levels.

Goldman is expecting this to lead to dividends per share of 10 cents in FY 2023 and 20 cents in FY 2024.

These certainly are good times for shareholders!

Though, you might not be able to say the same for passengers, which are having to pay higher than normal prices for domestic flights due to strong demand and low capacity. But with travellers seemingly willing to pay these prices, you can’t blame Qantas for charging them.

The post Leading broker tips Qantas share price to climb to a new record high 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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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