Why the Qantas (ASX:QAN) share price could shoot higher in 2021

The Qantas Airways Limited (ASX:QAN) share price could be going 20% higher from here according to one leading broker. Here's why…

| More on:
nose of Qantas plane WUNALA

Image Source: Qantas

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Qantas Airways Limited (ASX: QAN) share price was a positive performer yesterday after the Government announced a $1.2 billion stimulus package to support the domestic tourism market.

The airline operator's shares rose by a solid 2.5% to end the day at $5.30.

This latest gain means the Qantas share price is now up 35% over the last six months.

Can the Qantas share price go higher?

The good news for investors is that one leading broker still believes the Qantas share price can go a lot higher from here.

According to a note out of Goldman Sachs this morning, its analysts have reiterated their buy rating and $6.38 price target on its shares.

This price target implies potential upside of approximately 20% over the next 12 months.

What did Goldman say?

Goldman was pleased with the news and believes the stimulus on tourism and leisure routes will underpin its expectations of a tourism/leisure led recovery in the Australian domestic market.

In addition to this, the broker expects the discounted ticket sale to support Qantas' cash inflows.

"QAN actively re-paid c.A$2bn of revenues received in advance (RRIA) during 1H21, which we expect to re-build during the recovery phase. QAN's 1H21 revenue received in advance stood at A$3.7bn and was A$2bn lower than pre-covid levels (1H21). The proposed ticket sale will aid QAN's cash inflows and we expect rising RRIA to benefit net debt levels and ultimately equity valuations."

It also expects the government's package to provide direct support to retain employees, which should mean the airline won't have to incur additional and upfront cash redundancy costs.

Another positive is that the offer of discounted fares tends to support full-fare purchases. Goldman explained:

"We have seen that historically flash sales have generated significant peripheral demand for full-fare ticket sales. During the NZ recovery last year, AIR.NZ announced a 3-day flash sale with the offer of 180k discounted seats and subsequently sold 250k seats within a 72 hours period. We expect a similar level of demand to be generated with this highly publicised offer."

Exposure to the COVID-19 recovery

Overall, the broker believes Qantas is a great way for investors to gain exposure to the COVID-19 recovery. Goldman concluded:

"We reiterate our Buy rating on QAN.AX with our 12-month TP of A$6.38 (based on 50% SOTP (FY22E)/50% NPV) presenting 20% potential upside. QAN represents a strong recovery investment, if the Australian COVID-19 vaccination program has the effect of reducing community transmission of the virus and limits the need for domestic border closures.

The key downside risks to our view are from: (i) increased market capacity resulting from increasing competition; (ii) moderation in underlying passenger demand; (iii) higher fuel prices; (iv) weaker A$; and (v) worse outcomes than anticipated from the cost reduction program."

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A man looking at his laptop and thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

The markets lost their steam this Thursday.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

3 amazing ASX 200 shares to buy and hold forever

Brokers think these shares are in the buy zone. Let's see why they could be top buy and hold picks.

Read more »

iPhone with the logo and the word Google spelt multiple times in the background.
Opinions

I've been buying these 2 US stocks in 2025. Here's why

Sometimes the US markets are a better place to go shopping for stocks.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Share Gainers

Why Catapult, Hutchinson, SKS, and West African shares are pushing higher today

These shares are having a strong session despite the market weakness.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Dexus, Mayne Pharma, Nufarm, and Treasury Wine shares are falling today

These shares are having a tough session on Thursday. But why?

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Mergers & Acquisitions

IAG share price lifts off on strategic alliance approval

IAG shares are racing higher in Thursday’s sinking market.

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

Up 72% in 2025, why is this ASX 200 gold stock racing ahead of the benchmark again today?

Investors are bidding up this high-flying ASX 200 gold stock again on Thursday. But why?

Read more »

A woman wearing a black and white striped t-shirt looks to the sky with her hand to her chin contemplating buying ASX shares today as the market rebounds
Share Market News

Where could the RBA interest rate go in the next 12 months?

Here’s what one expert thinks could happen with interest rates by early 2026.

Read more »