On Friday, CLSA updated its outlook on Qantas Airways Ltd. (QAN:AU) (OTC: QUBSF) shares, increasing the price target to AUD7.00 from AUD6.80, while maintaining an Outperform rating.
The revision follows Qantas's fiscal year 2024 performance, which, according to the firm, showed revenue and EBITDA below consensus forecasts but was in line with profit-before-tax expectations.
Qantas's demand remains robust, and its balance sheet remains strong. This financial stability led the airline to announce an additional A$400 million buyback, surpassing CLSA's projections.
In terms of future dividends, Qantas anticipates reinstating fully franked dividends starting from the first half of the fiscal year 2025, as it begins to pay cash tax again.
For the first half of the fiscal year 2025, Qantas expects its group domestic revenue per available seat kilometer (RASK) to increase by 2-4%, which is more optimistic than CLSA's previous forecast. On the other hand, the airline predicts a 7-10% decline in group international RASK, slightly more pessimistic than CLSA expected.
The revised price target to AUD7.00 reflects CLSA's positive outlook on Qantas's financial health and its operational expectations. The Outperform rating indicates that CLSA believes Qantas stock will perform better than the overall market in the near future.
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