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Are Flight Centre shares a buy after rebounding from a 6-year low?

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A family walks along the tarmac towards a plane representing more people travelling as ASX travel shares recover

Flight Centre Travel Group Ltd (ASX: FLT) could be staging a comeback.

Yesterday, the ASX 200 travel stock rose around 3% after releasing its third quarter update.

This was welcome news for Flight Centre investors. Last Friday, the company slumped to a six-year low of $10.15.

For the year to date, Flight Centre shares have declined more than 30%.

What did Flight Centre report yesterday?

The company reported a strong third-quarter update, despite ongoing travel disruptions and fuel supply challenges. 

Flight Centre revealed that its underlying profit before tax (UPBT) has risen 9.7% to $226.4 million and total transaction value (TTV) is up 7.6% to $19.5 billion for the nine months to 31 March.

The company said it continues to focus on efficiency, with costs now well below pre-pandemic levels and productivity up across the business. 

It also confirmed that its global corporate operations have remained resilient, recording solid transaction and profit growth, while the leisure division achieved nine consecutive months of double-digit TTV growth across all categories. Its corporate segment TTV rose 4% and leisure segment TTV climbed 12% over the quarter.

Flight Centre has reiterated its full-year UPBT target of $315 million to $350 million but said it is closely monitoring the impact of global events, especially unrest in the Middle East, on near-term trading. 

Are Flight Centre shares a buy, sell or hold?

Weak travel demand and geopolitical tensions have put pressure on the travel company’s stock. Meanwhile, inflation concerns and tighter cost-of-living have also seen many consumers scale back their discretionary spending on things like travel.

But when travel disruptions and fuel supply concerns ease, travel stocks like Flight Centre could rebound quickly.

After yesterday’s news and market reaction, prospective Flight Centre investors may be wondering whether the stock has bottomed out.

Analysts are incredibly bullish on the outlook for Flight Centre shares, with consensus of a steep upside ahead over the next 12 months.

According to TradingView data, 15 out of 17 analysts have a buy or strong buy rating on the travel stock. Another two rate the shares as a hold.

The average target price of $16.60 implies a potential 60% upside at the time of writing. But some think the travel shares could soar even higher, by 90% to $19.66 in the next 12 months.

This suggests that those looking to add an ASX travel stock to their portfolio should seriously consider Flight Centre at the current share price.

The post Are Flight Centre shares a buy after rebounding from a 6-year low? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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 Flight Centre Travel Group. 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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