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Top broker tips 17% upside for Qantas shares following Airbus order

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The Qantas Airways Limited (ASX: QAN) share price has lifted nearly 5% this week following the company’s update on its pandemic recovery.

Additionally, the iconic airline announced it has ordered 12 new Airbus A350s. The new aircraft will be ready for take-off from Sydney in 2025.

On the back of the news, broker Jefferies upgraded its price target for the Qantas share price. It’s predicting the stock has 17% upside, according to Reuters.

At the time of writing, the Qantas share price is $5.81, 0.17% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has also spent Wednesday morning in the green, having gained 0.27%.

Let’s take a closer look at why the broker thinks the ‘flying kangaroo’ is facing a green future.

Jefferies is expecting big things from the Qantas share price after the airline announced it could return to profitability next financial year.

It’s also more bullish on the stock following news the airline is bolstering its international fleet with the intention to fly non-stop from Sydney to London and New York from 2025.

Finally, Qantas’ expectation of further growth in both its earnings and demand has boosted the broker’s confidence.  

The airline believes its domestic capacity will be 105% of its pre-pandemic levels in the quarter ending 30 June and around 110% of pre-pandemic levels in the quarter ending 30 September.

Meanwhile, it’s predicting its international capacity will be bolstered to just under 50% of pre-pandemic levels this quarter. That’s expected to rise to 70% in the first quarter of next financial year.

Jefferies also believes the airline’s two concurrent projects – Winton and Sunrise – will cement its solid market position.

Winton aims to renew Qantas’ domestic fleet. The airline has ordered 40 aircraft under the project. The first of the planes are set to arrive next year.

Meanwhile, Sunrise is working to see non-stop flights operate from Sydney to London.

Jefferies is reportedly gearing up for Qantas to report a net loss of $1.28 billion for financial year 2022.

That’s down from its previous estimate of $1.49 billion and last financial year’s $2.28 billion pre-tax loss.

Additionally, it expects Qantas to report a net profit of $703.3 million for financial year 2023 – up from its previous expectation of a $688.8 million profit.

As a result, the broker has slapped the Qantas share price with a price target of $6.81 and a buy rating.

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