2 ASX travel shares buy-rated by experts that could take off

Travel is booming. These two picks by experts could take advantage of that.

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Key points

  • Both of these ASX shares could travel higher, according to experts
  • Corporate Travel Management is one of the largest players in the business-to-business sector
  • Webjet is a leading online travel agency and corporate travel business

ASX travel shares might be an exciting sector in which to look for opportunities with travel returning, according to experts.

COVID-19 has had a huge impact on the travel sector over the past two and a half years. But now things are returning somewhat to normal – borders are opening, planes are in the air and so on.

Experts have named two shares that could fly higher with significant upside. While one expert’s opinion doesn’t automatically mean a share will do well, it could be worth paying attention.

Having said that, here are two buy-rated ASX travel shares.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel Management is one of the world’s largest corporate travel operators.

It’s currently rated as a buy by the broker Macquarie, with a price target of $25.80. That suggests a possible rise of around 40% over the next year as the company sees a return to almost pre-COVID levels.

In terms of activity, Corporate Travel gave an investor update last month which showed total transaction value (TTV) had recovered to 70% of 2019 levels in North America, 86% in Europe, and 71% in Australia and New Zealand.

However, the company expects monthly revenue to surpass 2019 calendar year levels in the fourth quarter of FY22. It’s targeting $265 million of earnings before interest, tax, depreciation and amortisation (EBITDA) when things are 100% recovered.

The business claims it’s recovering faster than the corporate travel sector in its largest regions, with “strong” market share gains in all regions. Management boasts that its value proposition, global scale and financial strength are all relevant during this COVID recovery period. It currently has zero debt.

Macquarie puts the current Corporate Travel share price at 20x FY23’s estimated earnings.

Webjet Limited (ASX: WEB)

Webjet is another ASX travel share that has a large presence in the corporate travel world with its WebBeds division. It also has its online travel agency (OTA) business.

Webjet is currently rated as a buy by the broker Citi, with a price target of $6.94. That suggests a possible rise of around 30% in the next year.

Citi thinks the Webjet setup will allow it to perform well in the coming years and that WebBeds can perform.

Last month, the business reported its FY22 result. It says it returned to profitability in the second half of FY22, delivering positive cash flow. The company says its working capital continues to improve, with a cash surplus of $4 million per month.

Furthermore, Webjet says it has seen a strong start to FY23, with all businesses profitable in April and indications of a “further strong uplift in May”. In May 2022, WebBeds’ total transaction value was ahead of May 2019, while Webjet OTA bookings were tracking at 80% of pre-pandemic levels.

Management sees “significant growth opportunities in all businesses as global travel markets reopen”.

WebBeds’ costs are more than 20% lower than pre-pandemic levels, despite global wage pressures, which will help its profitability margins as the company fully recovers.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management Limited, Macquarie Group Limited, and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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