Flight Centre Travel Group Ltd (ASX: FLT) shares are storming higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $16.70. In afternoon trade on Wednesday, shares are swapping hands for $17.38 apiece, up 4.1%.
For some context, the ASX 200 is up 0.6% at this same time.
While Flight Centre shares remain down 7% over 12 months, Sequoia Wealth Management's Peter Day forecasts a year of outperformance ahead for the travel company (courtesy of The Bull).
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The upside for Flight Centre shares
Day, who has a buy recommendation on Flight Centre shares, said, "The company's trading update at its recent annual general meeting was well received, with confirmation of a turnaround in October when compared to a weaker September quarter."
Addressing shareholders at the AGM on 14 November, Flight Centre CEO Graham Turner said he was "heartened by a marked recovery in October across our key metrics of TTV [total transaction value], profit and profit margin". The recovery follows what he admitted was a "patchy first quarter".
Day noted:
This serves to remind that trading conditions have been inconsistent during the past six months. A possibly more stable macro and political environment in 2025 will be key to boosting confidence in FLT's earnings outlook amid potential for a share price re-rating.
Sequoia Wealth retains its overweight recommendation with a price target of $22.04 for Flight Centre stock.
That represents a potential upside of 26.8% from current levels.
What else is happening with the ASX 200 travel stock?
Flight Centre shares could be getting some added support today after the company announced that it has successfully completed the reverse-bookbuild for its liability management exercise on its $400 million 1.625% convertible notes due 2028.
The travel company said it has repurchased $140 million of the principal amount of the existing notes at a repurchase price of $195,800 plus $287 in interest. Following the note repurchase, approximately $200 million of the 2028 notes will be outstanding.
Commenting on the repurchase, Turner said:
We are very pleased with the response from noteholders. We see this as an important step in the management of our capital structure as we proactively move to boost future shareholder returns.
A buy-back of this scale also sends a strong message about our confidence in the business and its near-term prospects.
Flight Centre shares could get additional support down the road on this front, with the company expecting further active management of its convertible notes liability.
