Corporate Travel Management shares fall on UK govt cuts
Make us a preferred source
Make us a preferred source on Google
The news: Shares in Corporate Travel Management pared Thursday's gains on the ASX, as analysts made minor revisions to their forecasts after the travel company warned that its Europe revenue growth could be at risk.
The numbers: Corporate Travel shares were down 3.9% to $11.92 by 11:15am, having closed 4.7% higher on Thursday.
Analysts generally kept their ratings unchanged, with some minor revisions:
- Citi retained its 'buy' rating and lifted its target price from $13.50 to $13.90;
- Morningstar cut its FY25 EBITDA forecast by 2% but kept its $16 fair value estimate;
- Jarden maintained its 'overweight' rating and $14 target price, but lowered its FY25 earnings-per-share forecast by 2%;
- Morgan Stanley stayed 'overweight' on the stock and maintained its $17 price target; and
- Shaw and Partners retained its 'buy' rating and $15.90 price target.
The context: Jarden said Corporate Travel is "well placed to outperform, with the key to a rerate being a consistent message, with few surprises", with the Q1 update being a "clear sign this is beginning".
Morgan Stanley said it expects a "modest downward re-calibration" of consensus estimates following the update. However, given low investor expectations and a broader recent softness in Australian stocks, the result should be well received, its analysts said.
Citi reduced its UK EBITDA estimates on "short-term uncertainty". Its analysts noted that the British government's budget, unveiled this week, included cost reductions to UK government department travel, the source of 10% of Corporate Travel's revenue.
Morningstar said it characterises Thursday's share rise as "relief rally", noting that the group's Q1 result "lacks any material surprises". Like Citi, Morningstar reduced its Europe EBITDA forecast reflecting the estimated impact from planned expenditure cuts by the UK government, Corporate Travel's largest customer in Europe.
The sources: Jarden research, Citi research, Morgan Stanley research, Shaw and Partners research, Morningstar research
