It certainly has been an incredible year for the Qantas Airways Ltd (ASX: QAN) share price.
Since the start of 2024, the airline operator's shares have rallied almost 70% higher.
Can the run continue next year? Let's see what could be in store for investors in 2025.
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Qantas share price outlook for 2025
After being classed as significantly undervalued for some time by analysts, the Flying Kangaroo's shares are now trading largely in line with consensus valuations.
For example, Goldman Sachs, which has been urging investors to buy Qantas shares for a while now, has a buy rating and $8.90 price target on them.
So, with the Qantas share price currently trading at $8.98 at the time of writing, this price target which for a long time looked almost ambitious, is now actually below where it stands today.
In May, Goldman Sachs said this when its shares were trading at just $6.07:
QAN is trading 4% below pre-COVID market capitalization with the enterprise value still 7% lower despite a structurally improved earnings capacity. Relative to regional/ US peers (median PE of 9.1x), QAN is trading on a 29% discount at 6.4x FY25 PE. This is more than 2x below the historical 5Y average discount of 14%. We expect this gap to narrow as QAN delivers earnings that are sustainably above pre-COVID levels and demonstrates ability/ willingness to distribute capital to shareholders while renewing the fleet.
Well, the broker couldn't have called it any better. What it said is exactly what happened, leading to the Qantas share price hitting a record high earlier this month. Well done if you picked up shares then.
Can its shares keep rising?
While Goldman Sachs' price target may now have been surpassed, it is worth noting that another leading broker recently bumped its price target even higher.
Towards the end of last month, Morgan Stanley retained its overweight rating and lifted its price target to $10.50.
This implies potential upside of almost 17% for investors over the next 12 months.
Dividends to return
Another thing that Qantas shareholders can look forward to in 2025 is the probable return of dividends.
A number of analysts believe that the company will pay its first dividend since 2019 when it releases its half year results in February.
For example, Morgan Stanley expects the airline operator will pay total dividends of 27 cents per share for FY 2025. This represents an attractive 3% dividend yield at current prices.
All in all, another year of good returns could be coming for shareholders in 2025 if this broker is on the money with its recommendation.
