Qantas Airways Limited (ASX: QAN) shares were under pressure on Thursday following the release of its half-year results.
After initially taking off in early trade, the airline operator's shares soon lost altitude and dropped deep into the red.
This led to the Qantas share price ending the day almost 7% lower at $5.21.
Image source: Getty Images
Should you buy Qantas shares?
If you want some big returns over the next 12 months, then you may want to consider buying the Flying Kangaroo's shares.
That's because the team at Goldman Sachs believes that its shares could rise over 50% from current levels.
According to a note out of the investment bank this morning, its analysts have reiterated their buy rating with a trimmed price target of $8.05.
Based on where Qantas shares currently trade, this implies potential upside of 55% for investors.
In addition, it is worth noting that while the broker doesn't expect dividends in FY 2024, it expects the company to resume paying them next year.
And it could be worth the wait. Goldman is forecasting a 30 cents per share dividend for FY 2025, which equates to a 5.8% dividend yield.
What did the broker say?
While Goldman has revised its earnings estimates lower, it highlights that its earnings are still significantly stronger than pre-COVID times. Yet its valuation is not. It explains:
Despite negative revisions, we note that our FY24 EPS remains 52% above pre-COVID levels even as the business faces higher (vs pre COVID) fuel prices, elevated current customer investment and a 10% yoy GSe decline in unit revenue (FY24 RASK is 24% above pre-COVID equates to average 4.4% per annum). Despite this, QAN is trading 17% below its pre-COVID market capitalization with the enterprise value 24% lower. Retain Buy.
