Qantas shares lift as analysts reaffirm 'buy' ratings
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The news: Qantas shares continued to rally on Tuesday, a day after the stock surged in response to the launch of the airline's expanded loyalty program, as analysts reaffirmed their 'buy' ratings on the company.
The numbers: Shares in Qantas were trading 2.1% higher at $5.81 by 11:45am AEDT.
UBS analysts maintained their 'buy' rating on Qantas, but lowered their target price on the airline from $7.55 to $7.50, noting that the overall impact of the new frequent flyer offer is likely to be "relatively immaterial" to earnings and cash flow.
Goldman Sachs analysts updated their net profit after tax (NPAT) forecast for Qantas to reflect the announcement of the new loyalty program, reducing estimated FY24 NPAT by 2%, keeping FY25 NPAT unchanged, and lifting FY26 NPAT by 2%. They maintained their 'buy' rating for Qantas and their target price of $8.05.
Morgan Stanley analysts retained their 'overweight' rating for Qantas and kept their target price at $8.00. They noted that despite the airline's loyalty segment now expecting to deliver a FY24 EBIT of $500 million to $525 million, compared to $500 million to $550 million previously forecast, the change was "negligible" at a group level.
The context: On Monday, Qantas said it would add 20 million more reward seats to the company's frequent flyer program, in one of the biggest expansions in its 35-year history.
Qantas said the new "Classic Plus" program was a new way for frequent flyer members to use their Qantas points to book flights, and reward seats could be booked on international flights departing Australia for travel from 1 July. It will then be rolled out across the rest of the airline's international and domestic network by the end of the year.
The sources: UBS research, Goldman Sachs research, Morgan Stanley research
