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Investing.com - Citi upgraded Qantas Airways Ltd. (ASX:QAN) stock rating to Buy from Neutral on Thursday, while raising its price target to AUD12.20 from AUD9.60. The airline, currently valued at $10.64 billion, has demonstrated strong momentum with a 33.58% gain year-to-date and trades near its 52-week high.
The upgrade comes as Citi identifies international travel and the low-cost carrier market as the two main growth segments in Australia, with Qantas positioned to capitalize on both areas better than its competitor Virgin Australia.
Citi highlighted Qantas Group’s commitment to Western Sydney Airport, noting that both Jetstar and Qantas mainline are committed to the new facility, unlike Virgin Australia, giving Qantas an advantage in capturing growth and offsetting potential market cannibalization.
The investment bank increased its earnings before interest and tax (EBIT) forecast for Qantas by approximately 3% through fiscal years 2026 and 2027, reflecting modest available seat kilometer (ASK) revisions offset by higher fuel-driven margins.
Citi expects Qantas to outperform Virgin Australia in top-line growth while benefiting from the same fuel-related tailwinds, making it the firm’s preferred airline investment in the Australian market.
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