Qantas Airways (QAN) Shares Recommendation

UBS has a Neutral 2 stock recommendation for the Qantas Airways (QAN) stock with a share price target of $3.80. In the stock analysts' opinion, the positive sentiment for the airline is likely to continue considering the recent downturn in their stock price having touched recent lows of around $3. In line with recent falling oil prices, UBS thinks that Qantas is getting a double benefit: both fro the oil price movement and "buoyant revenue". UBS notes that: "Although the current year's fuel bill is 70% hedged, the heavy reliance on options means that there is around 80% leverage to the falling oil price. If we lower our US$71bbl crude assumption to US$64bbl, we estimate we would face a circa 30% upgrade to FY07E and beyond EPS, all else being equal. However, this assumes no associated erosion in yields." Meanwhile, Macquarie Research Equities (MRE) has also noted falling oil prices that would positively affect the Qantas (QAN) bottom line. MRE has a neutral stock recommendation for QAN with a 12 month share price target of $4.17. MRE have noted that the Qantas July operating statistics were "very strong, with group load factor of 81.1% on the back of a 5% increase in capacity." For the domestic routes: "Mainline load was 81.3% and capacity grew 3.3%. Jetstar was strong, reporting a 6.9% increase in load to 82.5% on the back of a 60.7% increase in capacity (largely the impact of annualisation)." For International routes: "Total load increased 2.1%." "Most importantly, the growth in yield was colossal (+7.8%)."

Qantas Airways Limited is listed on the Australian Stock Exchange (ASX) under stock code QAN. You can view their investor website here. QAN was listed on the ASX on 31 July, 1995. Qantas is involved in the operation of international and domestic air transportation services, the sale of worldwide and domestic holiday tours and associated support activities including catering, information technology, ground handling and engineering and maintenance. Find out the meaning of the recommendations in this primer. Browse for other broker recommendations. Check your charts and good luck with your share trading!