It has been a tough time for owners of Flight Centre Travel Group Ltd (ASX: FLT) shares.
The travel agent giant's shares have lost 20% of their value in under a month.
This means that they are now down by approximately a third since this time last year.
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Why are Flight Centre shares being sold off?
There are a number of reasons why the company's shares have fallen heavily in recent weeks.
One of those is broad market weakness, which has caused most ASX shares to drop into the red.
In addition, recent updates from US airline operators have shaken confidence in the travel market, putting further pressure on Flight Centre's shares.
But the main drag has been the company's half year results release at the end of last month. Investors were quick to hit the sell button after the company fell short of the market's expectations.
In fact, the selling has been so strong that the Australian stock exchange recently sent the company an ASX Aware Letter.
What was asked?
The stock exchange operator asked the company the following:
Does FLT consider that any measure of its statutory or underlying earnings for the half year ended 31 December 2024 as disclosed in the Results Announcements ('Earnings Information') differed materially from the market's expectations, having regard to the following three base indicators (in decreasing order of relevance and reliability).
Flight Centre acknowledged that its profits fell short of expectations. However, it advised that it decided against providing a prior update on its earnings as the variance between its performance and expectations did not warrant one. It responded:
FLT does not consider that any measure of its statutory or underlying earnings for FY25 1H differs materially from the adjusted half-year consensus forecast of sell-side analysts. FLT considers the key metric to assess FLT's performance is underlying PBT. FLT's actual reported underlying PBT for FY25 H1 was $116.8 million which is 6.8% below the adjusted half-year consensus. This falls within the 15% guideline recommended by ASX.
Should you invest?
The team at Morgans is likely to see this weakness as a buying opportunity. Following its results release, the broker retained its add rating with a price target of $19.80. This implies potential upside of approximately 40% for investors over the next 12 months.
One of Flight Centre's executives appears to believe the selling has been overdone and has been buying shares on-market this month, which could be a good sign.
A change of director's interests notice reveals that Gary Smith bought 3,000 shares on-market on 13 March at an average $13.88 per share. This represents a total consideration of $41,640.
