Macquarie Group Ltd slaps $4.02 share price target on Mantra Group Ltd

Mantra Group Ltd (ASX:MTR) looks like it could offer investors solid total returns from today's share price.

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The Mantra Group Ltd (ASX: MTR) share price has been on the nose recently as investor enthusiasm for the hotel and leisure sector wanes on concerns that Airbnb could disrupt the industry.

Still the analysts at Macquarie Group Ltd (ASX: MQG) believe that Mantra could offer around 40% upside from today's share price according to financial news wires that are reporting Macquarie has a put a $4.02 price target on Mantra shares.

Macquarie's analysts reportedly believe that the threat from Airbnb has been overplayed and note that Mantra is currently trading at a discount to hotel and leisure sector peers.

I would have to agree with the Macquarie analysts in thinking it would be a mistake to think that Airbnb will disrupt too much of Mantra's hotel business.

Mantra has been the subject of takeover speculation recently, although its shares continue to offer a reasonable mix of income and growth in my opinion as they sell for $2.90 on 16x analysts' estimates for 17.8 cents in earnings per share in FY 2017.

The group should be able to deliver steady if unspectacular earnings growth over the next 5 to 10 years ahead thanks to the growing inbound tourism market and offers a fully franked dividend yield of 4.6% based on estimates for FY 2017's full year payout. Accordingly, I would rate Mantra shares a buy at under $2.95.

Others with leverage to the growth of in and outbound tourism include Sealink Travel Group Ltd (ASX: SLK), Webjet Limited (ASX: WEB), and Flight Centre Travel Group Ltd (ASX: FLT). Of these I would rate Webjet as another business for the watch list given the growth rates of its online business-to-business booking operations.

Motley Fool contributor Tom Richardson owns shares of MANTRA GRP FPO and Webjet Ltd. You can find Tom on Twitter @tommyr345 The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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