If you think Qantas Airways shares have run too far, think about the buybacks.
That's the message from Macquarie analysts on Tuesday morning, who reckon investors should prepare for Qantas buybacks as early as August when the airline owner hands down its full-year result.
"With capex expected to be broadly stable at $1.5bn per annum over FY18 and FY19, there is significant scope for QAN to announce a share buyback at the FY17 result on 25 August," the analysts told clients.
"We expect a $500m buyback in FY18 and FY19, which we do not believe is the consensus expectation."
Qantas' shares have doubled over the 12-months, including a 65 per cent since the start of this year.
However Macquarie said the airline was still trading well below its peers on an earnings multiple basis, and below its own historical trading range.
Qantas is trading at 4.4-times one-year forward earnigns, on an enterprise value to EBITDAR basis, below its 5.1-times long-term average.
Macquarie upped its 12-month price target on Qantas shares to $6.50, from $5.90.