FLT - Morgan Stanley rates as Equal-weight
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Flight Centre has evolved its model from a leisure focus to be 50/50 leisure/corporate, and successfully so, the broker believes. Corporate customers are using the business because it is quicker, cheaper and more efficient.
Corporate is less likely to suffer short term earnings disruptions than leisure and what the broker believes the market is overlooking is the opportunity for growth in the US, as to date it only represents 10% of earnings. The broker is expecting an FY18 earnings beat, but retains Equal-weight on a 19x FY19 PE.
Target rises to $68 from $54. Industry view: Cautious.
Sector: Consumer Services.
Target price is $68.00.Current Price is $63.27. Difference: $4.73 - (brackets indicate current price is over target). If FLT meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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