Analysts have reduced their price targets for Australia’s Qantas Airways (ASX:QAN) following the airline’s warning about heightened expenses due to increasing fuel prices and their announcement of further investments targeted at improving customer experience.
Brokerage firm Citi has cut its price target to A$6.00 from A$6.95, whilst maintaining a ‘neutral’ rating.
Similarly, Jefferies has lowered its price target to A$7.79 from A$8.78 and continued to uphold a ‘buy’ rating.
Citi contends that Qantas’s voluntary assumption of heftier expenses may hint at recent public issues potentially affecting earnings.
The firm calculates that the roughly A$330 million in extra costs could result in a year-on-year earnings downturn.
Conversely, Jefferies believes that the airline’s ‘positive’ customer improvement initiative and continuous robust demand suggest that any damage to the Qantas brand is ‘fixable’.
Jefferies also argues that a structurally higher profitability level could be achieved from the second half of 2024 onwards, despite slashing its earnings per share forecasts for fiscal years 2024 to 2026 by 14%, 4.4%, and 2.1% respectively.
As of its last close, Qantas’s shares had fallen around 13% year-to-date, settling at A$5.230 on Monday.
Qantas Airways (ASX:QAN) is a leading Australian airline, offering domestic and international flights.