What's the outlook for the Flight Centre share price in September?

The travel agency ended August on a high. We consider if it can continue to soar this month.

| More on:
Man in suit looks through binoculars in front of a control tower at an airport.

Image source: Getty Images

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

Key points

  • The Flight Centre share price outperformed the ASX 200 index on Wednesday
  • Its growth comes on the back of cautiously optimistic comments from brokers
  • The overall industry appears optimistic about the positive direction of the recovery in travel

The Flight Centre Travel Group Ltd (ASX: FLT) share price outperformed the S&P/ASX 200 Index (ASX: XJO) yesterday, but can it keep up this momentum for the rest of September?

Wednesday's 3.17% gain may have had something to do with broker Goldman Sachs recently commenting on the Flight Centre share price, as covered by my colleague, James Mickleboro.

In addition, fellow ASX travel share Webjet Limited (ASX: WEB) yesterday disclosed a positive trading update, which suggests the battered travel industry is bouncing back.

Let's take a closer look at what brokers had to say about Flight Centre.

Brokers' thoughts on Flight Centre

Based on a note from Goldman Sachs, the broker was quite surprised by the strong recovery in Flight Centre's earnings in Australia and New Zealand.

However, the broker expected more growth in America, which was impacted by a more unfavourable mix of flights.

Goldman Sachs held onto its neutral rating with a reduced price target of $19.60. That implies a potential upside of almost 15%.

In a further possible boost for the Flight Centre share price, it appears Goldman Sachs considers the travel industry as a whole is heading in the right direction.

According to a note out of the investment bank from this morning, it believes the Webjet share price can continue its upward trajectory after keeping its buy rating at a reduced price target of $6.80. That suggests a potential upside of 23% over the next 12 months.

Webjet also flagged in its trading update that it expects earnings in FY24 to exceed levels seen pre-pandemic. It anticipates broader travel market activity is expected to return to 2019 levels.

Another broker, Morgans, was also positive on Flight Centre. It holds a lower price target at $18.25, supported by a hold rating. This broker believes the Flight Centre share price is fair given the risks the travel agency is facing.

It was also announced yesterday that substantial shareholder JP Morgan Chase increased its shareholding of Flight Centre. So, this may also have contributed to the uptick in the Flight Centre share price.

Additionally, the travel agency's shares gained 3.52% on Tuesday amid rumours the company is considering the acquisition of US travel management company Altour International.

Flight Centre share price snapshot

At the time of writing, Flight Centre shares are down 1.12% to $17.70.

In the last year, it has risen by almost 4% and is up 3% in the past month. The ASX 200 has fallen by 9% in the last year and is down around 2% in the last month.

The overall sentiment towards the Flight Centre share price appears to be becoming more positive. However, a lot of this optimism is being held back with measured caution, given how quickly things can change.

Travel agencies are more exposed to external factors than the average business, making it more difficult to forecast future earnings. But they can be sound cyclical plays when optimism hits rock bottom — it's a matter of assessing when the bottom is, though.

Flight Centre has a market capitalisation of around $3.58 billion.

Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Travel Shares

Smiling woman looking through a plane window.
Travel Shares

Virgin Australia returning to the ASX with $685m IPO

Demand for domestic travel draws the airline back to the stock market.

Read more »

A woman ponders a question as she puts money into a piggy bank with a model plane and suitcase nearby.
Travel Shares

Here's the earnings forecast out to 2029 for Qantas shares

Can the airline generate even stronger earnings? Here’s what experts think.

Read more »

Man sitting in a plane seat works on his laptop.
Travel Shares

Qantas shares have doubled in less than 2 years. Are they a buy, hold or sell?

What do analysts think of the Flying Kangaroo?

Read more »

A woman reaches her arms to the sky as a plane flies overhead at sunset.
Travel Shares

Why the Qantas share price soared 20% in May to new all-time highs

With another stellar month in May, Qantas shares are up more than 79% in a year.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Travel Shares

What does Macquarie think Web Travel Group shares are worth?

Is the broker bullish or bearish? Let's find out.

Read more »

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Web Travel share price rockets 13% on market leading full-year growth

Investors are sending Web Travel shares soaring today. Here’s why.

Read more »

Man sitting in a plane seat works on his laptop.
Travel Shares

$10,000 invested in Qantas shares 5 years ago is now worth

Let's see what happened if you were brave and bought the Flying Kangaroo's shares in 2020.

Read more »

Woman on a tablet waiting in for her flight in an airport and looking through a window.
Travel Shares

Why have Qantas shares outperformed Flight Centre shares by more than 100% over the past 12 months?

The two share prices are travelling in opposite directions.

Read more »