The Flight Centre Travel Group Ltd (ASX: FLT) share price continued its positive run in May.
During the month, the travel agent's shares rose a sizeable 7.5%.
This compares favourably to a 3% decline by the ASX 200 index over the same period.
It also means that Flight Centre shares are now up almost 50% since the start of the year.
Image source: Getty Images
Why did the Flight Centre share price smash the market in May?
Investors were fighting to get hold of the company's shares last month after it released an update at the Macquarie Group Ltd (ASX: MQG) conference.
At the event, Flight Centre revealed that its strong recovery from COVID continued during the third quarter. This culminated in the company delivering monthly total transaction value (TTV) of over $1 billion for the first time in March.
It wasn't just investors that were impressed with this update. A number of brokers responded very positively and were quick to revise their estimates and valuations higher to reflect Flight Centre's strong performance.
One of those was Morgans, which responded to the update by upgrading its shares to an add rating with a $26.25 price target. It commented:
FLT's group cost margin is now at an historic low reflecting permanent and structural cost base changes and growth in lower cost and highly scalable models (Independents and Online). With greater confidence in the travel recovery and the benefits of FLT's transformed business model starting to emerge, we think FLT is now at the cusp of an earnings upgrade cycle which may continue for the next few years. We have upgraded our forecasts and move to an Add rating with our new SOTP valuation of A$26.25.
The good news is that this price target is still 22% higher than where the Flight Centre share price currently trades. This could bode well for its performance in June!
