Flight Centre downgraded
Recommendation
The last two months of the financial year are important to Flight Centre, so there's always a risk 2017 profit comes up short of management's pre-tax profit target of $300m–330m. But it's looking increasingly unlikely, particularly as management suggested today that airfare deflation seems to be moderating.
Today's ‘Investor Presentation' also outlined plenty of other levers that Flight Centre management can pull to improve performance. With the market starting to get more excited that the 2017 downturn will prove temporary – consistent with our view in Is Flight Centre the next JB Hi-Fi? – the share price has jumped above our Buy price. We're downgrading to HOLD.
Note: The Intelligent Investor Growth and Equity Income portfolios own shares in Flight Centre. You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by clicking here.