We initiate a coverage for Qantas in an objective manner. The estimates in our research are derived from our research framework which takes into account the domestic and international aviation industry conditions, competitive advantages, and past financial performance.
The in-depth analysis of our research has also factored in management capabilities, catalysts, and possibilities for Qantas. We have also considered the impact of COVID-19 on Qantas and forecasted its future performance accordingly
We estimate the intrinsic value of Qantas to be $4.24/share through a DCF model. The current share price of $3.50 represents a 17.5% discount. Currently trading at trailing P/E 6.12 and EV/EBITDA 3.58, Qantas’ relative valuation is at appropriate level vs industry peers. Upon considering the valuation and all the factors discussed, we hold a Neutral outlook for Qantas