Morgans has resumed coverage of Corporate Travel Management. To avoid confusion for our readers, prior to a blackout period of coverage the broker rated the company as a Hold with a $14.20 price target. Given the hiatus in coverage, FNArena will consider this update as a pseudo initiation of coverage, with an Add rating and target price of $20.50.
On October 30, Corporate Travel Management will acquire Travel & Transport (T&T), a leading corporate travel company in the US at a cost of US$200.4m. Strategically, this acquisition is both highly accretive and compelling, enthuses Morgans. It’s considered this will provide the company with its targeted level of scale and will make the company the fifth largest corporate travel company in the world.
When travel demand recovers post covid-19 (Morgans assume FY23), the company should achieve its $10bn total transaction value (TTV) target with the addition of T&T, calculates the broker.
In addition, the analyst highlights the acquisition will give the company access to a world class hotel program which will further bolster its value proposition with clients, while also being a lucrative revenue stream.
The rating is upgraded to Add from Hold (after a period of non coverage) and the target price is increased to $20.50 from $14.20.
Sector: Consumer Services.
Target price is $20.50.Current Price is $17.79. Difference: $2.71 – (brackets indicate current price is over target). If CTD meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).