QAN +5.28%: Rallied today on another earnings upgrade just 6 weeks after their last one, the flying Kangaroo now saying profit before tax (PBT) would be $1.35-1.45bn for 1H23, a $150m increase on their last update. While only early days, the momentum is clearly strong in QAN and we suspect they’ll look to re-charge their current $400m share buy-back which is now 76% complete. The market is now a lot more rational i.e. higher prices, and the consumer is still keen to travel. On UBS numbers, QAN is now trading in a PE of 7.7x for FY23 with strong earnings ‘tailwinds’, although when you look at what is being charged for overseas travel, it’s hard to see such buoyant conditions remain if we nosedive into recession next year.
MM is neutral/bullish QAN, but it is not without risk
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