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What’s driving the Qantas share price to all-time highs?

Good first quarter results, a solid outlook, bullish brokers and a just-completed share buyback have all likely contributed to the recent Qantas share price run-up.

In just 20 days the Qantas (ASX: QAN) share price has risen 10%, seen its market capitalisation soar to $10.35bn and is now flirting with the $7 per share price level.

Unsurprisingly, this comes after the blue-chip airline posted solid Q1 FY20 results in October. Here, Qantas reported that Group revenue had grown by 1.8% to $4.56bn and that the company expected Group capacity to grow at a rate of 0.5% to 1.0% in the first-half of the 2020 fiscal year – in regards to both domestic and international flights.

It was likely the Group’s positive comments concerning the current and short-term outlook for international flights that also helped the share price rise in recent times. Specifically, the renowned Qantas CEO, Alan Joyce, pointed out that:

'Qantas international has seen significant upside from competitor capacity contracting more than anticipated, which is expected to continue for at least the remainder of the first half.'

Mr Joyce continued by saying:

'Domestically, published competitor capacity is set to increase despite the weakness in the market. The Qantas Group will maintain its strategic position in all parts of the market and therefore our total domestic capacity is expected to grow by up to 1 per cent in the second half.'

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Qantas share price: buyback in focus

Other factors, such as Qantas’s previously announced and recently completed off-market share buyback program have also likely influenced the recent bullish share price movements.

On November 4, Qantas (ASX: QAN) announced that it had completed buying back some 79.7 million Qantas shares, worth $443 million in total and equating to 5.1% of the company’s previously issued capital.

In fact, 'due to strong demand, a 78.69% scale back of tenders was required.'

The analyst take: where next

On the bullish end of town, it looks as if brokers are getting exactly what they wanted. Assessing the broader broker view off the back of the airline’s Q1 results we see the following price targets: CitiBank ($6.90), UBS ($6.40), Morgan Stanley ($7.00) and Credit Suisse ($6.00).

So far the Qantas share price is bucking against those lower estimates, though one also wonders just how much room it has left to run now that it flirts with all-time highs.

For now, solid Q1 results, a robust outlook and the just-completed share buy-back all rank as key positives for Qantas. With concerns that the stock will fall from its newly reached all-time highs likely a remote thought in the minds' of investors.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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