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Key points
- Corporate Travel Management shares could be very cheap according to Morgans
- Its analysts have named the company as their top pick in the travel sector
- The broker's price target implies 36% upside for investors
If you're interested in gaining exposure to the travel sector, then Corporate Travel Management Ltd (ASX: CTD) shares could be worth considering.
That's the view of the team at Morgans, which sees significant value in the corporate travel specialist's shares.
What is Morgans saying about Corporate Travel Management?
According to the note, the broker is a fan of its proposed acquisition of the corporate business of Helloworld Travel Ltd (ASX: HLO).
It commented: "Corporate Travel Management recently announced its second major acquisition during COVID with Helloworld's corporate travel business in ANZ for A$175m. The acquisition price appears reasonable, it meets CTD's strict investment criteria, there are material synergies on offer, it is nicely EPS accretive, and significantly scales its ANZ business while further diversifying its client base and service offering."
And while it acknowledges that the Omicron variant of COVID-19 has pushed back its earnings recovery, it is confident that demand will recover when it is safe to travel again.
Its analysts explained: "Some of CTD's 2Q22 and 3Q22 will be impacted by the Omicron variant which has slowed travel demand globally. When trading slows, this impacts CTD's margins given it has rehired staff in anticipation of the recovery. Most in the industry expect that travel demand will materially improve from March. We have consequently revised our forecasts. We continue to assume that earnings recover fully in FY24."
Are Corporate Travel Management shares good value?
The broker notes that Corporate Travel Management shares are its key pick in the travel sector and could be very cheap at current levels.
Morgans has an add rating and $29.00 price target on them. Based on the current Corporate Travel Management share price of $21.31, this implies potential upside of 36% for investors over the next 12 months.
