If you've been considering investing in the travel sector, then I have good news for you. The team at Morgans believes that now could be the time to pounce after the recent derating of ASX travel shares.
What did the broker say about travel shares?
While Morgans acknowledges that the travel market recovery is taking longer than expected and has reduced its earnings estimates to reflect this, it believes a lot of value has emerged and investors should act before a potential rerating happens.
The broker commented:
Despite travel demand recovering strongly, in recent months the travel sector globally has derated due to concerns about a weak macro outlook. We think share price weakness represents a buying opportunity and see the quarterly reporting season in the US and Europe during July and then the Australian reporting season in August as a catalyst for a rerating.
Which shares is the broker recommending?
Morgans' number one pick in the sector at the moment is Corporate Travel Management Ltd (ASX: CTD). It has an add rating and $25.85 price target on the corporate travel specialist's shares. This compares to the latest Corporate Travel Management share price of $19.67.
In second place is online travel agent Webjet Limited (ASX: WEB). It has an add rating and $6.55 price target on its shares. This compares to the current Webjet share price of $5.50.
Another ASX travel share that the broker is positive on is Helloworld Travel Ltd (ASX: HLO). It has an add rating and $2.72 price target on its shares. This is notably higher than the current Helloworld share price of $1.67.
But what about Flight Centre Travel Group Ltd (ASX: FLT)? Unfortunately, the broker only has a neutral rating and $19.60 price target on its shares. It is expecting Flight Centre's earnings to come in below consensus estimates in FY 2023 due to "limited ANZ international airline capacity, China's strict travel restrictions and the need to rehire and train staff."
