We’ve been on the short side of Flight Centre for most of 2016.
The share price rebounded from their early November low of $29.50 to close last week at just under $33.00. However, structural headwinds, recent earnings shortfalls, and overly optimistic guidance suggest clear skies are not ahead for the firm.
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On November 4th, Flight Centre indicated that 1H 2017 profits before tax (PBT) would decline 18 to 28%. The company maintained an FY17 earnings guidance of $320m – $350m. We believe this is overly optimistic and unlikely to be achieved given international flight price deflation.
Gradual ongoing selling pressure in FLT could see a low around $28 in early to mid 2017.
