Why the soaring Qantas share price could be 'difficult to sustain'

The Qantas Airways Ltd (ASX: QAN) share price is gaining altitude today.

Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed on Friday trading for $9.03. In afternoon trade on Monday, shares are changing hands for $9.04 apiece, up 0.1%.

For some context, the ASX 200 is down 0.2% at this same time.

As you can see on the chart below, the Qantas share price has been a stellar performer in 2024, up 68.7% since 2 January. That's more than six times the 10.3% gains posted by the ASX 200 over this same period.

Shares in the Flying Kangaroo have been attracting investor interest amid the ongoing rebound in domestic and international air travellers.

The company has also gone a long way in repairing the customer trust issues it faced last year, with new CEO Vanessa Hudson upping the spend on a range of customer services to rebuild loyalty.

Other tailwinds that have helped shares smash the benchmark returns this year include lower fuel costs and the $2 billion of shares Qantas has repurchased over the past two years.

However, according to Shaw and Partners' Jed Richards, ASX investors appear to have been bidding up the Qantas share price too rapidly.

Is the Qantas share price set to descend in 2025?

"Although the passenger airline industry has returned to pre-COVID-19 levels, the Qantas share price has recovered and significantly exceeded the share price in 2019," said Richards, who has a sell recommendation on the ASX 200 stock (courtesy of The Bull).

He noted that, "The shares have risen from $5.35 on January 2 to trade at $9 on December 5."

Indeed, in mid-January 2020, before most of the world had any idea what COVID was or how the coronavirus was about to close domestic and international borders across the globe, Qantas stock was trading for $7.15, or some 26% below current levels.

By 20 March of that year, shares had crashed to $2.36 apiece, which would have been a fine time to load up on them. Investors who did have the nerve to buy at those lows will now be sitting on gains of 282%.

According to Richards, though, that share price may be hard to maintain through 2025:

In our view, market enthusiasm levels are excessive, and the share price trades at levels that will be difficult to sustain. The share price is now above most analyst targets. We suggest investors consider selling the stock and locking in some gains.

As for those analyst targets, while Goldman Sachs has a buy rating on the ASX 200 airline, the broker has a $8.90 target for the Qantas share price, 1.5% below current levels.

The post Why the soaring Qantas share price could be 'difficult to sustain' appeared first on The Motley Fool Australia.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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