Why brokers think the Qantas (ASX:QAN) share price could fly 17% higher

Brokers are bullish on the Qantas Airways (ASX: QAN) share price following new government stimulus packages and the vaccine rollout.
The post Why brokers think the Qantas (ASX:QAN) share price could fly 17% higher appeared first on The Motley Fool Australia. –

asx share price rise represented by red paper plane flying away from other white paper planes

ASX travel shares took the spotlight last week after the federal government announced a $1.2 billion support package that includes 800,000 half-priced airline tickets. The Qantas Airways Limited (ASX: QAN) share price rose 4% last week on the back of the positive news.

Qantas shares have also attracted multiple broker upgrades as the airline is expected to emerge as a leaner business post-COVID

Brokers upgrade the Qantas share price to a Buy

Macquarie Group Ltd (ASX: MQG) is the latest broker to upgrade the Qantas share price. On Monday, the broker shared its views that Qantas will emerge from the pandemic as a structurally improved business with a focus on the more attractive domestic market and its loyalty business. 

Macquarie believes that the improvement in domestic travel, and Qantas’ leading loyalty program, will reduce the downside risks associated with international travel. The broker stated that a vaccine rollout combined with border policies and government stimulus could see domestic capacity push to above pre-COVID levels in the near term. 

The broker also expects vaccine rollouts in key international destinations to be largely completed by the end of 2021. However, the timing surrounding when international travel will recommence remains uncertain. 

Macquarie upgraded the Qantas share price from neutral to outperform with a $6.35 target price, which represents an upside of ~17% on today’s price. 

Citi and Ord Minnett also upgraded their targets for the Qantas share price last week. 

On 12 March, Citi upgraded the Qantas share price to a Buy with a $6.14 target price. The broker believes the government stimulus packages add greater certainty for borders. Citi’s comments did note, however, that a leisure-led recovery would deliver negligible upside for profitability.

On 10 March, Ord Minnet upgraded the Qantas share price target to $6.00 with a Buy rating. The broker believes Qantas will emerge from COVID with a significantly reduced cost base and an enhanced competitive position.  

ASX travel shares higher on Monday 

The S&P/ASX 200 Index (ASX: XJO) is trading slightly higher on Monday, up 0.06% at the time of writing. However, ASX travel shares are grinding comparably higher across the board. As well as Qantas, which is currently up 2.6% at the time of writing, these include: 

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why brokers think the Qantas (ASX:QAN) share price could fly 17% higher appeared first on The Motley Fool Australia.

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