Macquarie Group Ltd (ASX: MQG) recently named the ASX travel sector as attractively valued.
With the S&P/ASX All Ordinaries Index (ASX: XAO) sitting just below its all-time high, ASX investors may be struggling to find value in the current market.
This makes the ASX travel sector even more compelling on a relative basis.
In a 10 July research note, Global Travel Trends, the broker noted that the travel sector was trading at suppressed valuation multiples. This was attributed to recent cycle downgrades and a lack of outlook visibility.
The broker also commented that the market has been concerned about overall travel volumes and travel activity in the US since peak tariff uncertainty in March and April. However, US volumes had held up better than anticipated, with the most recent quarterly Travel Security Administration (TSA) data down only -0.9% from the prior equivalent period.
While Macquarie sees value across the sector, it named a clear favourite.
Which is it?
Macquarie names top travel sector pick
The broker named Web Travel Group Ltd (ASX: WEB) as its preferred ASX travel sector stock.
Web Travel Group shares are down 48% over the past year.
However, the broker has assigned the stock an outperform rating and a price target of $6.19. Given that its shares closed at $4.68 yesterday, this suggests a 32% upside over the next 12 months.
When naming Web Travel Group as its preferred exposure in the sector, the broker said:
WEB is currently our preferred exposure as in volatile macro conditions its earnings should be more resilient than ASX peers.
We recently upgraded WEB as visibility concerning medium-term revenue and UEBITDA margins has improved. We expect WEB to continue to scale and are increasingly confident it will achieve its $10bn FY30 TTV target.
Other options in the sector
Macquarie named two other ASX travel stocks that it also expects to increase in value over the next year in its Global Travel Trends report.
The broker currently has an outperform rating on Flight Centre Travel Group Ltd (ASX: FLT), and a price target of $16.05. Flight Centre shares closed at $13.34 yesterday.
Summarising its view on Flight Centre shares, Macquarie said:
Outperform FLT. FLT's valuation is currently suppressed at c6x NTM EV/EBITDA. On a 12-18 month view this represents a good entry point. Whilst short-term earnings visibility remains low, we believe longer-term growth should return if: 1) TTV growth tracks to target; 2) cost-efficiency programs gain traction; and 3) further rate cuts stimulate leisure demand. Timing of BSP payments landing.
Macquarie also shared that it currently has a neutral rating on Corporate Travel Management Ltd (ASX: CTD). However, with a price target of $15.80, this suggests the share price will be higher in 12 months' time.
Summarising its view on Corporate Travel Management shares, Macquarie said:
Neutral CTD. CTD's operating environment is volatile with visibility into client activity levels low, particularly in North America. There is a range of earnings outcomes possible in FY26, with CTD not yet updating its FY26 guidance. Short interest of c9.5% is at 3-year highs so positive outlook commentary could see CTD rally.
