Two ASX 200 travel stocks have just received a broker upgrade from the team at Citi.
Flight Centre Travel Group Ltd (ASX: FLT) and Corporate Travel Management Ltd (ASX: CTD) could be a buy.
Flight Centre shares shed 1.01% to $21.52 on Tuesday, while Corporate Travel Management shares slid 0.91% to $20.71.
Let's take a look at what could be ahead for these two ASX travel stocks.
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Travel shares could rebound
Flight Centre and Corporate Travel have both been upgraded to buy from neutral by the team at Citi.
Citi vice-president Sam Seow is forecasting a boost in passenger numbers, more corporate travel and greater supplier margins in FY24 if travel goes back to normal, The Australian reported. In quotes cited by the publication, he said:
Looking forward, our view is relatively simple. We estimate the business models most impacted at the start of the recovery should be the winners at the end.
He has placed a $23.80 price target on Flight Centre shares, which applies a 10.6% upside based on the company's last closing price. Meanwhile, he has elevated Corporate Travel to a $25.50 price target, implying an upside of about 23%.
Tourism Research Australia is forecasting total visitor spending (domestic and international) to top pre-COVID-19 levels in 2023 and hit $227.7 billion by the year 2027. Domestic overnight and day trip spending is already higher than before COVID-19, while international expenditure is expected to exceed pre-COVID in 2024.
Flight Centre's total transaction volume in the 10 months to April 30 was in line with the company's record FY19.
The company upgraded its FY23 guidance to an EBITDA between $270 and $290 million, up from a previous guidance of $250 to $280 million.
Corporate Travel Management advised it had won a major contract with the UK government in April. This is worth about £1.6bn (nearly $3 billion Australian dollars).
Meanwhile, analysts at Morgans have also recently named Corporate Travel Management as an "ASX growth stock to buy". The broker has a $24 price target on the travel company's share price. Morgans said:
CTD should be a materially larger business post COVID given it has made two highly accretive acquisitions during the downturn.
Share price snapshot
Flight Centre shares have risen 3.96% in the last year.
Corporate Travel Management shares have lost 3.72% in the last year.
