Qantas Airways Update

Qantas Airways (QAN) have a Buy 2 broker call and a share price target of $6.50 from Australian Stock Exchange analyst UBS. Digging into Capacity Growth and Updating Price Target: their prior A$5.90 price target was based solely on our 12x FY08E EPS valuation, and did not include anything for our A$1.10 in extra value from frequent flyer demerger and A$2bn in capital management as published on 22 May. They no longer see management reluctance as an impediment and are raising our target to A$6.50 to reflect half of the benefit. Clear catalysts to come: Apart from ongoing traffic momentum, we expect an announcement as to capital management at the August result, and more detail on the frequent flyer demerger towards the end of this year. Tiger's entry remains the only visible negative event this year. International capacity growth needs to be watched: They were surprised at management's expectation for its international capacity to grow by 3% in FY08, 10% in FY09, and 13% in FY10; reflecting the deferral of aircraft retirements. They expect similar growth from Qantas' rivals highlighting the finite nature of the current supply demand balance and our flat pricing outlook from FY09 onwards. The analysts' A$5.90 valuation is based on 12x our FY08 EPS forecast, which is in the middle of the current trading range of Qantas Airways' peers. Their A$6.50 price target incorporates an additional 60c for the frequent flyer demerger and capital management.

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. Margaret Jackson is the chairperson for Qantas and Geoff Dixon is the CEO. The company 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. They also also operate subsidiary businesses including other airlines, and businesses in specialist markets such as Qantas Holidays and Qantas Flight Catering. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade QAN. Check your charts and good luck with your share trading!