The Flight Centre share price has made a flying start to 2023! Should I buy?

Can Flight Centre shares keep rising?

| More on:
A smiling boy holds a toy plane aloft while a girl watches on from a car near an airport runway.

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

Despite being the most shorted share on the Australian share market, the Flight Centre Travel Group Ltd (ASX: FLT) share price has started the year strongly.

As you can see below, with another gain under its belt today, the travel agent's shares are now up almost 10% in 2023.

Created with Highcharts 11.4.3Flight Centre Travel Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Where next for the Flight Centre share price?

Unfortunately, I'm not aware of a single broker that has a buy rating on Flight Centre shares.

However, that doesn't necessarily mean that analysts don't believe they can climb higher from here.

For example, Goldman Sachs has a neutral rating and $16.10 price target and Morgans has a hold rating and $18.25 price target on its shares.

Based on the current Flight Centre share price of $15.79, the latter implies potential upside of 13% for investors from here.

Morgans highlights that the company is recovering from the pandemic, but also notes that uncertainty remains. It is for that reason that the broker only has a hold rating on its shares at present. It recently explained:

FLT is targeting further bottom-line improvement during FY23 and heavily skewed to the 2H. It said that it is too early to provide specific market guidance given normal travel patterns (local v long haul, holidaymakers v VFR) are yet to resume; China is yet to reopen; airline capacity is restricted; and its revenue margins are yet to stabilise and normalise.

The broker also believes that revenue margins may be softer in the near term but expects them to improve once capacity normalises and competition increases. It said:

FLT's revenue margin is expected to remain below pre-COVID levels in the near term because of cyclical factors (higher airfare prices), planned business mix changes (growth in lower margin channels/businesses) and the lower commissions.

While capacity is restricted and the airlines load factors are high, we think FLT has reduced bargaining power with the airlines. However over the medium term, as capacity normalises and there is increased competition, we think the airlines will rely more on FLT as one of the world's largest travel groups and will thus reward the company for its efforts.

All in all, the future is looking brighter for Flight Centre, but it may just have a few more dark clouds to get through first.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group. 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

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

Virgin Australia vs Qantas shares: Which is the best buy?

Competition in Australia's aviation market is heating up.

Read more »

A female cabin crew member on a place looks like she has a headache.
Travel Shares

Why this expert is calling time on Virgin Australia shares

A leading expert is calling time on Virgin Australia shares. But why?

Read more »

Couple at an airport waiting for their flight.
Travel Shares

Macquarie increases price target for Qantas shares

Qantas shares hit a new all-time high today.

Read more »

Happy woman trying to close suitcase.
Travel Shares

Guess which ASX travel stock Macquarie just named as its top pick with 32% upside?

While Macquarie sees value across the sector, it named a clear favourite. 

Read more »

A man in a dark blue suit walks through an airport past floor-to-ceiling windows with a Qantas plane flying in the distance
Travel Shares

Up 16% this year, does Macquarie rate Corporate Travel Management shares a buy, hold or sell?

Does the travel stock have further to fly?

Read more »

A group of young people lean over the rails overlooking Sydney's Circular Quay and check out the sights of the city around them.
Travel Shares

Can these two battered ASX travel shares bounce back?

Ahead of important tourism data this week, these two travel companies could be buy low candidates. 

Read more »

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

Did Flight Centre, Air New Zealand, or Qantas shares fly highest in FY25?

How did these ASX travel shares perform last financial year?

Read more »

Man waiting for his flight and looking at his phone.
Travel Shares

The Virgin Australia share price just slipped back below IPO levels. Should I buy shares today?

A leading expert offers his forecast on the struggling Virgin Australia share price.

Read more »