Cathay Pacific (SEHK:293) Valuation Check After Strong 1-Year Share Price Rebound
Cathay Pacific Airways (SEHK:293) has quietly rewarded patient investors, with the share price climbing around 37% over the past year and nearly doubling over five years as travel demand normalizes.
See our latest analysis for Cathay Pacific Airways.
That momentum is still very much alive, with a 90 day share price return of about 13.5% and a 1 year total shareholder return above 37%. This suggests confidence in the airline recovery story is building rather than fading.
If Cathay’s rebound has you thinking more broadly about travel and mobility, it might be worth exploring auto manufacturers through auto manufacturers for other cyclical recovery ideas.
Still, with Cathay trading slightly above consensus targets but screens suggesting a hefty intrinsic discount, investors face a key question: is the airline still undervalued, or is the market already pricing in its future growth?
Most Popular Narrative: 9.6% Overvalued
With Cathay Pacific’s fair value in the most followed narrative sitting below the HK$12.00 last close, expectations lean toward a more conservative long term payoff profile.
The analysts have a consensus price target of HK$10.378 for Cathay Pacific Airways based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of HK$13.2, and the most bearish reporting a price target of just HK$8.2.
Curious why modest revenue expansion, gently easing margins, and a richer future earnings multiple still point to limited upside from here? The supporting assumptions may surprise you.
Result: Fair Value of $10.94 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, sustained cost savings from newer aircraft, or a sharper than expected rebound in premium and cargo demand, could justify a higher long term valuation.
Find out about the key risks to this Cathay Pacific Airways narrative.
Another Angle on Value
Analysts may see Cathay Pacific as about 9.6% overvalued, but our DCF model tells a very different story, suggesting the shares trade roughly 53% below intrinsic value at around HK$25.77 per share. Is the market underestimating long term cash flows, or is it overrewarding near term caution?
Look into how the SWS DCF model arrives at its fair value.
Build Your Own Cathay Pacific Airways Narrative
If you see the story differently, or want to dig into the numbers yourself, you can build a tailored view in just minutes: Do it your way.
A great starting point for your Cathay Pacific Airways research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
Looking for more investment ideas?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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