Goldman Sachs: Qantas' earnings poised for structural improvement

May 31, 2024 12:13 PM IST | By Investing
 Goldman Sachs: Qantas' earnings poised for structural improvement

Investing.com - Goldman Sachs (NYSE:GS) analysts have reiterated their buy rating for Qantas Airways Ltd (ASX:QAN), predicting a structural improvement in earnings capacity, driven by an A$1 billion cost reduction program.

The ongoing investment in customer experience is also showing promising results, improving operational performance and mitigating key downside risks.

Analysts noted, "QAN’s current market capitalisation in line and enterprise value still 5% below pre-COVID levels. As such, we believe QAN is not priced for a generic recovery, let alone prospects for improved earnings capacity."

Key catalysts that could trigger a positive market response include trading updates and the earnings release on August 24.

⚠️Enjoy InvestingPro tools and strategies for A$13.9/month thanks to a limited-time discount on the 1-year Pro subscription! CLICK HERE to take advantage before it's too late, and unlock access to AI-powered ProPicks, ProTips, and more! for 10% off use coupon code: "INVPRODEAL"⚠️
InvestingPro Fair Value indicates a 30.7% upside for Qantas Airways!

Despite higher fuel prices and continuous customer experience investments, the analysts' forecasts indicate a PBT 51% above pre-COVID in FY24e and 61% higher in FY25e.

QAN is trading at a 29% discount at 6.4x FY25 PE, more than 2x below the historical 5-year average discount. The analysts expect this gap to narrow as QAN delivers earnings that are sustainably above pre-COVID levels and demonstrates its ability and willingness to distribute capital to shareholders while renewing the fleet.

Goldman Sachs reiterated a buy rating with a 12-month price target of 8.05.

This article first appeared in Investing.com


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Limited, Company No. 12643132 (“Kalkine Media, we or us”) and is available for personal and non-commercial use only. Kalkine Media is an appointed representative of Kalkine Limited, who is authorized and regulated by the FCA (FRN: 579414). The non-personalized advice given by Kalkine Media through its Content does not in any way endorse or recommend individuals, investment products or services suitable for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a qualified financial planner and/or adviser. No liability is accepted by Kalkine Media or Kalkine Limited and/or any of its employees/officers, for any investment loss, or any other loss or detriment experienced by you for any investment decision, whether consequent to, or in any way related to this Content, the provision of which is a regulated activity. Kalkine Media does not intend to exclude any liability which is not permitted to be excluded under applicable law or regulation. Some of the Content on this website may be sponsored/non-sponsored, as applicable. However, on the date of publication of any such Content, none of the employees and/or associates of Kalkine Media hold positions in any of the stocks covered by Kalkine Media through its Content. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content. Some of the images/music/video that may be used in the Content are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music or video used in the Content unless stated otherwise. The images/music/video that may be used in the Content are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated or was found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.

Sponsored Articles


We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.