The Qantas Airways Limited (ASX: QAN) share price has come under pressure on Wednesday.
In early afternoon trade the airline operator’s shares are down a sizeable 5.5% to $3.86.
Why is the Qantas share price tumbling lower?
Qantas shares have dropped lower today following a broad market selloff after a disappointing night on Wall Street.
In addition to this, also weighing on the company’s shares could be news that AstraZeneca has paused its late-stage trial for a potential coronavirus vaccine due to safety concerns.
There are high hopes for its promising AZD1222 vaccine, which is being developed with Oxford University.
In fact, earlier this week CSL Limited (ASX: CSL) signed an agreement with AstraZeneca for the expected manufacture of approximately 30 million doses of the vaccine candidate for supply to Australia.
Given that tourism markets are unlikely to return to normal until the successful development of a vaccine, its failure would be a bitter blow for the industry.
However, it is worth noting that this trial pause isn’t unusual.
In a statement to CNBC, AstraZeneca said: “This is a routine action which has to happen whenever there is a potentially unexplained illness in one of the trials, while it is investigated, ensuring we maintain the integrity of the trials.”
The biotech giant intends to speed up the investigation in order to “minimize any potential impact on the trial timeline.”
Should you buy the dip?
Although I do see value in Qantas’ shares, given the uncertainty in global travel markets, I’m not in a rush to invest just yet.
Two brokers that are more positive are Macquarie Group Ltd (ASX: MQG) and Morgan Stanley.
Late last month Macquarie’s analysts put an outperform rating and $4.25 price target on Qantas’ shares. Morgan Stanley thinks its shares can go higher and has an overweight rating and $4.90 price target on them.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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