The Flight Centre Travel Group Ltd (ASX: FLT) share price has been having a tough year.
Since the start of 2022, the travel agent's shares have lost almost 10% of their value.
Concerns over the stuttering travel market recovery appear to be dragging on Flight Centre's shares.
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Is the Flight Centre share price good value?
The team at Goldman Sachs have been looking at the Flight Centre share price recently and have given their verdict.
According to the note, while the broker sees significant potential value in its shares, it still isn't enough to warrant a buy recommendation.
Goldman Sachs has a neutral rating and $19.60 price target on the company's shares. Based on the current Flight Centre share price of $16.90, this implies potential upside of 16% for investors over the next 12 months.
In addition, while the broker isn't expecting any dividends in FY 2023, it sees scope for them to return in FY 2024.
What did the broker say?
Goldman notes that Flight Centre delivered a mixed result in FY 2022. While it was pleased with its total transaction value (TTV) and profits, it was concerned by the company's revenue margin. The broker commented:
FLT reported FY22 revenue at A$1007mn (-8.7% vs. GSe and +3.4% vs. Visible Alpha Consensus Data) and underlying PBT loss at -A$-361mn vs. GSe at -A$363.9mn and consensus of -A$368.9mn. While TTV was largely in line with GSe at A$10.3bn, revenue margin was impacted by mix shift towards large corporate, domestic and online businesses, with this being a key area of focus for investors through the post results call. In line with its competitors, staff availability/cost pressures also remained a key point of discussion.
Its analysts were also very pleased with the company's performance in the ANZ region. Though, once again, this was offset by a surprisingly softer performance in the United States.
In our view, the key area of positive surprise for us was the stronger than expected recovery in ANZ earnings and the continued strength in corporate account wins. However on the flipside, America's recovery was slower than expected driven by momentum strengthening only in the latter part of the year.
In light of this, it has retained its neutral rating and continues to prefer rival Webjet Limited (ASX: WEB). Goldman has a buy rating and $6.80 price target on its shares.
