Qantas Airways Ltd (ASX: QAN) shares had their wings clipped this week.
Since the end of last week, the airline operator's shares have lost around 10% of their value.
But despite this, they are still up over 70% since this time last year.
Should investors be buying the dip? Let's see what analysts are saying about Australia's flag carrier airline.
Image source: Getty Images
Are Qantas shares in the buy zone?
The team at Ord Minnett remains positive on Qantas and sees value in its shares at current levels.
According to a recent note, the broker believes that the airline offers an "attractive investment option" following its strong half year results.
Commenting on the company, Ord Minnett said:
The company reported first-half FY25 earnings broadly in-line with consensus expectations as travel demand remained firm across both domestic and overseas divisions. It also declared a special dividend on top of its interim dividend. On the downside, Qantas forecast fuel costs to be around $200 million more than previous estimates, and notes wage inflation has risen.
Post the results, we cut our forecasts to incorporate these factors. Nonetheless, Qantas offers an attractive investment option as recent external issues, such as court cases, fade away, and as management maintains strong operational performance. Furthermore, the return of dividends signals confidence in its prospects.
Is anyone else bullish?
Elsewhere, Morgan Stanley and Goldman Sachs are very positive and have the equivalent of buy ratings on its shares with price targets of $11.50 and $11.80, respectively. Based on where Qantas shares last traded, this implies potential upside of 29% to 33% over the next 12 months.
Goldman has named a number of reasons why it is bullish on the Flying Kangaroo. This includes the structural resetting of its earnings to higher levels (relative to pre-COVID) and its fleet renewal program. In respect to the latter, the broker said:
In 1H25, QAN took delivery of 11 aircraft. Within this Jetstar took delivery of 8 new aircraft – with the renewal upside (& robust demand) evident in segment margins. As the renewal program gains momentum across the group/, we see upside from yield mix, load factor, capacity and cost efficiencies, driving the next leg of growth.
There is clearly capex attached to renewal (GSe A$12.5bn of total capex across FY25-27 vs A$12bn prior), of which A$6.5bn is on new aircraft. However, our modeling of the operational benefits (incorporated with this note) provides us with confidence that QAN should continue to track the bottom of its target leverage range and therefore generate surplus capital to return to shareholders.
All in all, these analysts appear to believe that there's room for Qantas shares to fly higher from here.
