Why Qantas shares are Morgans’ top pick in the travel sector

A woman reaches her arms to the sky as a plane flies overhead at sunset.

A woman reaches her arms to the sky as a plane flies overhead at sunset.

Now could be the time to pounce on Qantas Airways Limited (ASX: QAN) shares before they take off.

That’s the view of analysts at Morgans, which see significant potential upside ahead for the airline operator’s shares.

So much so, the broker has the company on its best ideas list and has named it as its preferred pick in the travel sector.

What is Morgans saying about Qantas shares?

According to a recent note, the broker has an add rating and $8.35 price target on the flag carrier airline’s shares.

Based on the current Qantas share price of $6.30, this implies potential upside of almost 33% for investors over the next 12 months.

Why is the broker bullish?

Morgans is bullish on Qantas due to its belief that the company has significant near-term earnings momentum. It explains:

QAN is now our preferred pick of our travel stocks under coverage given it has the most near-term earnings momentum. Looking across travel companies globally, airlines are now in the sweet spot given demand is massively exceeding supply.

In addition, the broker highlights that Qantas shares are trading at a meaningful discount to pre-COVID levels despite being a much stronger business now. It adds:

QAN is trading at a material discount compared to pre-COVID multiples, despite having structurally higher earnings, a much stronger balance sheet, a better domestic market position, a higher returning International business and more diversification (stronger Loyalty/Freight earnings).

A final reason Morgans is bullish is the company’s positive outlook. It concludes:

The strong pent-up demand to travel post-COVID should result in a healthy demand environment for some time, underpinning further EBITDA growth over FY24/25. QAN’s balance sheet strength positions it extremely well for its upcoming EBITaccretive fleet reinvestment and further capital management initiatives (recently announced a A$500m on-market share buyback at its 1H23 result). There is also likely upside to our forecasts and consensus if QAN achieves its FY24 strategic targets.

The post Why Qantas shares are Morgans’ top pick in the travel sector appeared first on The Motley Fool Australia.

Should you invest $1,000 in Qantas Airways Limited right now?

Before you consider Qantas Airways Limited, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Qantas Airways Limited wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of April 3 2023

(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(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

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.

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

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s