On Friday, RBC (TSX:RY) Capital Markets adjusted its outlook on Qantas Airways Ltd. (QAN:AU) (OTC: QABSY) shares, increasing the price target to AUD6.75, up from the previous AUD6.25, while maintaining a Sector Perform rating. This adjustment follows the airline's acquisition of the remaining 49% stake in TripADeal for $211 million.
The move is part of Qantas's strategy to expand its footprint in the online holiday market and is expected to generate approximately $50 million per year in synergies across its Qantas, Jetstar, and Loyalty businesses.
Qantas has confirmed that its earnings and capital expenditure guidance remains unchanged following the acquisition. The revised price target by RBC Capital Markets suggests an 11% return over the next 12 months. Despite the acquisition, the firm does not anticipate significant revisions to earnings or valuation for Qantas.
The purchase of TripADeal is aimed at enhancing Qantas's online presence and offering in the competitive travel sector. The deal is seen as a strategic fit for the airline, allowing it to leverage its existing brands, including Jetstar and its Loyalty program, to maximize returns and customer engagement.
The airline's decision to reiterate its financial guidance post-acquisition indicates confidence in its current business strategy and performance outlook. With the integration of TripADeal, Qantas is poised to capitalize on the growing online travel market, while aiming to deliver value to its shareholders.
RBC Capital Markets' updated price target reflects the firm's view on the potential upside for Qantas shares, factoring in the recent acquisition and its expected benefits to the company's broader strategy. The Sector Perform rating suggests that the firm views the airline's stock as likely to perform in line with the sector average over the next year.
In other recent news, Qantas Airways Ltd. has seen an upgrade in its stock price target by Jefferies from AUD7.62 to AUD7.94, following enhancements to the Qantas Loyalty program.
The modifications, aimed at increasing member engagement, include the introduction of 20 million Classic Plus seats to facilitate point redemption, a move anticipated to contribute significantly to the projected EBIT of $0.8 billion to $1 billion by the financial year 2030.
The updated price target from Jefferies reflects the potential of these changes to the loyalty program. The adjustments are expected to provide a more rewarding experience for Qantas's frequent flyers and drive revenue growth.
These recent developments underscore Qantas's commitment to customer satisfaction and long-term financial health. Despite these changes, Jefferies has maintained a Buy rating on the airline's stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.