Broker Watch

Brokers bullish on Qantas: A full year of profits achieved in just six months

Fri 14 Oct 22, 12:35pm (AEST)
Qantas Travel Plane Flight
Source: iStock

Key Points

  • Qantas shares rallied 8.7% on Thursday after an unexpectedly positive market update
  • Qantas said it expects to post a $1.2bn to $1.3bn profit before tax for the first-half of FY23
  • This is more than double what many brokers were expecting

Qantas (ASX: QAN) shares have surged to their highest levels since May after the airline said it expects to post a record $1.2bn to $1.3bn profit before tax in the first-half of FY23.

To add some perspective, Qantas has posted five consecutive halves of outsized losses due to the pandemic, totalling $7bn.

However, the anticipated profit is well-above pre-covid levels, where the company posted $771m in profit before tax in the first-half of FY20.

The upbeat market update from Qantas has inspired several positive broker updates on Friday. Here's the rundown.

Brokers

Citi: Points out that a month ago, Qantas was expecting a profit before tax of $1.3bn for the entirety of FY23. Now, it expects to achieve that figure in the first-half. The investment bank upgraded the stock from a Sell to Neutral rating.

Credit Suisse: Similarly, the market update was more than double Credit Suisse's prior estimates. The analysts note that demand could remain elevated for up to eighteen months, even in the face of higher ticket pricing and expects Qantas to post a record $2.2bn profit for FY23. An Outperform rating was retained.

UBS: Another broker that was very surprised to see a $1.2bn to $1.3bn profit before tax guidance for the first-half of FY23. UBS analysts were expecting to see $463m. They now expect this momentum to continue, with record earnings expected in both FY23 and FY24. A Buy rating was retained.

Morgan Stanley: Posted similar views as the above. The analysts expect that growth in revenue and yield were the main drivers of the financial results. Although pointed out that international yields are expected to moderate as Qantas and other carriers increase capacity. An Overweight rating was retained.

The four brokers had an average price target of $6.53.

Qantas shares opened at $5.79 on Friday. The stock is up 15.6% year-to-date and up 3.8% in the last twelve months.

Screen Shot 2022-10-14 at 12.20.13 pm
Qantas share price chart

 

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

Get the latest news and insights direct to your inbox

Subscribe free