Qantas shares have soared to a record high after US investment bank Goldman Sachs upgraded its rating on the airline's improved earnings growth prospects.
Qantas shares gained as much as 3.7 per cent to hit $6.15 on Thursday after Goldman Sachs upgraded its rating on the stock from neutral to buy, and reset the airline's target price at $6.86 - more than 15 per cent higher than its most recent close.
Goldman Sachs analyst Owen Birrell said Qantas remains well placed to capitalise on a forecast recovery in the Australian domestic travel market led by solid emerging business and international leisure travel demand.
"In our view, the movement in the share price to date has been largely aligned with the global re-rating of peers and is yet to fully capture the earnings potential of the improving domestic demand outlook," Mr Birrell said.
Shares in Qantas have soared more than 80 per cent in 2017, as the company's financial performance continues to improve under the restructuring strategy of chief executive Alan Joyce.
Qantas made an underlying profit of $1.5 billion in the 2015/16 financial year - the highest in its 97-year history - and followed that with an underlying profit of $1.4 billion in 2016/17.
Mr Birrell said that transformation, falling global oil prices and a softening of the drag from the contracting mining sector all bring upside potential to Qantas' earnings outlook.
"Combined with the ongoing benefits of the 'transformation program' and a benign fuel price environment, we expect to see earnings continue to improve," Mr Birrell said.
After leading a tough restructure that included 4,800 job cuts, fleet updates and the addition of new, higher margin destinations, the value of Mr Joyce's stake in the airline is now $16.8 million.
Qantas shares ended Thursday's session 19 cents higher at $6.12.
