Flight Centre shares: Buy, hold, or fold?

Could Flight Centre shares really offer a 30% upside?

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Key points
  • The Flight Centre share price has dumped 19% so far this year to trade at $15.03 right now
  • Meanwhile, the company remains the most shorted on the ASX, with a short interest of 15.6% at last count
  • But brokers, while cautious, tip Flight Centre to post a notable gain, with one predicting a 30% upside for the stock

It's 2022, COVID-19 restrictions are continuously easing across Australia and around the world, and the travel sector appears to be regaining some lost ground lost. That's surely good news for the Flight Centre Travel Group Ltd (ASX: FLT) share price, right?

Well, that depends on who you ask.

Flight Centre shares have dumped 19.31% so far this year to trade at $15.03 at the time of writing.

That's more than 50% lower than they were trading prior to the pandemic. Though, the stock has lifted around 70% from its March 2020 low.

Comparatively, the S&P/ASX 200 Index (ASX: XJO) has slipped 10% so far this year and around 5% since COVID-19 took markets by storm.

So, what might the future hold for Flight Centre shares? Let's take a look.

A woman ponders a question as she puts money into a piggy bank with a model plane and suitcase nearby.

Image source: Getty Images

Could Flight Centre shares offer 30% upside?

While most brokers remain neutral on Flight Centre shares, many are tipping a notable upside for the stock.

But before we get to the bulls, let's check in with the company's short position.

Flight Centre has been the market's most shorted stock for the whole of 2022 so far. Nearly 15.6% of its shares were in the hands of short sellers at last count. That means plenty of market participants believe the travel share will slip further.

Yet, Morgans, for one, is relatively optimistic on the ASX 200 travel giant. Though, the broker has noted several risk factors facing the company.

It has a hold rating and an $18.25 price target on the stock, my Fool colleague James reports.

On the company's financial year 2022 results, Morgans senior analyst Belinda Moore said the broker expects Flight Centre to post "a strong recovery" this fiscal year.

However, its changing business model, execution, and reduced front-end airline commissions were flagged as having the potential to weigh on earnings.

Meanwhile, Flight Centre hasn't provided guidance for financial year 2023, blaming an uncertain outlook for the industry's post-COVID recovery.

Though, it did return to an underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) profit late in financial year 2022.

Goldman Sachs is more hopeful for the Flight Centre share price.

It has tipped the stock to lift 30% to $19.60. The broker also expects the company to return to dividends next financial year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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