Goldman Sachs says this ASX 200 travel share is a top buy

This travel share has caught the eye of analysts at Goldman Sachs.

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There are a number of options for investors to choose from in the travel sector.

But which ones should you buy? Well, one ASX 200 travel share that has just been named as a buy by analysts at Goldman Sachs is Corporate Travel Management Ltd (ASX: CTD).

Why is Corporate Travel an ASX 200 travel share to buy?

According to the note, the broker was impressed with Corporate Travel Management's performance in FY 2023. And following the release of results from Flight Centre Travel Group Ltd (ASX: FLT) and Amex GBT, the broker remains very positive on its outlook. It commented:

Post CTD/FLT and Amex GBT results, we continue to believe there is significant opportunity in the SME corporate travel industry from a shift from 1) shift from unmanaged to managed; and 2) industry consolidation. As the 4th player in a fast growing industry, with the fastest growth in FY23, highest EBITDA/Revenue margin, and a strong B/S with A$151mn net cash, we believe that CTD is well placed to further capitalize the industry growth trends organically and/or inorganically.

In light of this, the broker has reiterated its buy rating with a new price target of $21.60.

Based on the current Corporate Travel share price of $18.76, this implies a potential upside of 15% for this ASX 200 travel share over the next 12 months.

In addition, Goldman is expecting an attractive 2.9% dividend yield in FY 2024, sweetening the deal further.

What else is the broker saying?

Goldman highlights that Corporate Travel operates in a highly fragmented industry which gives it a huge growth opportunity. And with the ASX 200 travel share trading on lower than historical average multiples, it feels this is a great time to pick up shares. It explains:

Managed travel is a fragmented industry with the top 5 players only representing 32% market share (as of 2022). We view the increasingly complex travel market as offering opportunities for growth, especially in the SME space and government contracts. CTD holds a strong balance sheet and is well positioned to take advantage of organic and inorganic growth opportunities and recovery remains skewed to North America where we see relatively lower macro risks.

The stock currently trades at an ~10% discount to average historical P/E despite the growth outlook being ahead of historical levels. We expect ongoing data updates on business travel, updates from global corporate peers and key company updates to drive re-rating of the stock.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management and Goldman Sachs Group. The Motley Fool Australia has recommended Corporate Travel Management and Flight Centre Travel Group. 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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