Flight Centre Travel: Just the start of the upgrade cycle

About the author:

Author name:

By Belinda Moore

Job title:

Senior Analyst

Date posted:

04 May 2023, 7:00 AM

Sectors Covered:

Agriculture, Food & Beverage, Travel and Chemicals

• Flight Centre Travel's (ASX:FLT) trading update highlighted that its volumes continue to recover strongly. In March it delivered post-COVID record TTV (+6% vs March 2019).
• FY23 guidance has been narrowed and slightly upgraded at the mid-point, which is higher than consensus. Given FLT is tracking ‘comfortably within its guidance range’ and with its two biggest months to go, another upgrade is possible.
• FLT is now targeting a 2% NPBT margin for FY25 (was by the end of FY25). This is materially above consensus of 1.5%.
• With greater confidence in the travel recovery and the benefits of FLT’s transformed business model starting to emerge, we think FLT is now at the cusp of an earnings upgrade cycle which may continue for the next few years. We have upgraded our forecasts and move to an Add rating with our new SOTP valuation of (login to view).

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