QANTAS Airways shares have soared to a record high after investment bank Goldman Sachs upgraded its rating on the stock citing improved prospects for earnings growth at the airline.
Shares in Qantas rallied more than 3.5 per cent in intraday trading yesterday to $6.15 after Goldman upgraded its rating from “neutral” to “buy”.
The investment bank also put a target price of $6.86 on the stock — more than 15 per cent above the price Qantas shares closed at on Wednesday before the analysis was released.
Qantas shares closed 3.2 per cent higher yesterday at $6.12.
Goldman analyst Owen Birrell said the airline remained well placed to capitalise on a forecast recovery in the Australian domestic travel market, led by solid emerging demand for business and international leisure travel.
“In our view, the movement in the share price to date has been largely aligned with the global re-rating of peers and is yet to fully capture the earnings potential of the improving domestic demand outlook,” Mr Birrell said.
Shares in Qantas have soared more than 80 per cent this year as the company’s financial performance continues to improve under the restructuring strategy of chief executive Alan Joyce. Goldman’s research comes after the airline revealed last month that Mr Joyce received almost $25 million in pay and perks over the past year following the dramatic turnaround in its fortunes.
Qantas made an underlying profit — a tally that strips out one-off items — of $1.5 billion in the year to June 2016. That was the highest result in its 97year history, and was followed by a $1.4 billion result the past financial year. Net profit was $852 million.
Mr Birrell said restructuring at the airline and falling global oil prices were among factors that brought upside potential to Qantas’s earnings outlook.
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