Analyst warns of Qantas bearish outlook despite stock rally: Financial firm Morningstar’s equity analyst Angus Hewitt has sustained its bearish outlook for Australia’s Qantas Airlines, citing the airline’s hefty fleet modernization bill of AUD 20 bn (USD 13 bn), Bloomberg reports. Hewitt is the sole analyst out of sixteen watching Qantas to maintain a ‘sell rating’ for the company’s stock, which has seen a robust rally, rising by 65% over the last year. Qantas was ranked as the industry’s fourth top performer on Bloomberg’s World Airlines index.

The argument: Qantas has ordered nearly 200 new aircraft with manufacturers Boeing and Airbus to accommodate demand for direct flights from Sydney to New York and London. Hewitt argues that the cost of modernization — more than double the forecasted net profit for the same period — is too hefty and would cause “medium-term headwind.” The bill also exceeds Qantas' current market value of AUD 15.5 bn, making the replacement a "massive capex bill,” the news outlet reports, citing an email from Hewitt.

ICYMI- Qantas is set to face tougher competition soon: Qatar Airways received approval from the Australian government to acquire 25% of Qantas’ top competitor — Virgin Australia — back in March, a move that Qantas previously objected to last year.

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