Qantas Airways: The market still doesn’t believe this isn’t the top

About the author:

Billy Boulton
Author name:
By Billy Boulton
Job title:
Associate Analyst
Date posted:
25 August 2023, 10:00 AM
Sectors Covered:
Agriculture, Travel, Chemicals, Food & Beverage

  • Qantas Airways' (ASX:QAN) FY23 result was a record and all in line with recent guidance provided at its May trading update. The company continues to show confidence in its outlook and balance sheet (despite record upcoming capex spend) with it announcing another A$500m on-market share buyback (above MorgansF of A$400m).
  • Whilst we were hoping for a stronger message from QAN around earnings growth being delivered in FY24, outlook commentary was upbeat nonetheless. QAN reiterated its FY24 EBIT margin targets and also said that travel demand remains very strong and that it is seeing solid trading into the 1H24.
  • From here, 1H24 guidance likely provided in Oct/Nov will be the key share price catalyst. With QAN trading on its lowest P/E multiple in years (FY24F of 5.4x post buybacks), risk remains materially skewed to the upside. ADD maintained.

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