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Investing.com - RBC Capital upgraded Flight Center Travel Group Ltd (ASX:FLT) (OTC:FGETF) from Sector Perform to Outperform on Thursday, while raising its price target to AUD16.00 from AUD15.00.
The upgrade reflects RBC’s assessment that Flight Center’s leisure business appears undervalued when comparing the company’s corporate business segment to both local and international peers.
According to RBC Capital, the current valuation implies Flight Center’s leisure business is being valued at between 2.7 and 4.0 times price-to-earnings ratio, which the firm considers "overly pessimistic" for a business that has structurally improved since the COVID-19 pandemic.
RBC also identified potential upside from merger and acquisition activities, noting Flight Center could utilize cash from its AUD450 million convertible note issuance, with AUD325 million earmarked to repurchase existing convertible notes.
Flight Center Travel Group operates in both corporate and leisure travel segments across multiple markets, with its shares trading on the Australian Securities Exchange and over-the-counter in the United States.
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