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Brokers favourite ASX share for the COVID-19 reopening trade

The timing for the reopening of the global economy post COVID-19 remains highly uncertain, but this isn’t stopping brokers from picking ASX shares to buy now.
The post Brokers favourite ASX share for the COVID-19 reopening trade appeared first on The Motley Fool Australia. –

Brokers favorite ASX share COVID reopening trade buyA woman standing on a tarmac celebrates a plane lifting off, indicating rising share price in ASX travel companies

The timing for the reopening of the global economy post COVID-19 remains highly uncertain, but this isn’t stopping brokers from picking ASX shares to buy now.

Travel-related ASX shares are the posterchild for the recovery trade and that explains why the Qantas Airways Limited (ASX: QAN) share price, Flight Centre Travel Group Ltd (ASX: FLT) share price and Sydney Airport Holdings Pty Ltd (ASX: SYD) share price have bounced as COVID fears receded.

However, one ASX travel share that stands out is the Corporate Travel Management Ltd (ASX: CTD) share price. Morgans calls the business travel agent its “key pick” in the sector.

First to return to profits

This is particularly so following Corporate Travel’s trading update yesterday. The group has reach breakeven at the earnings before interest, tax, depreciation and amortisation (EBITDA) level in March.

“CTD expects to be EBITDA positive in the 4Q21, lead [sic] by ANZ and UK/Europe,” said Morgans.

“CTD is now EBITDA positive. It is the first travel stock under coverage to be profitable which highlights its greater exposure to essential services customers, domestic travel, large pipeline of new client wins and low cost base.”

Other reasons this ASX share is a favourite COVID reopening trade buy

These aren’t the only reasons what Morgans thinks the stock is ahead of the pack. Corporate Travel’s balance sheet has no debt, when all its peers do. This means the group has the strongest balance sheet in the ASX travel sector.

Morgans has an “add” recommendation on the Corporate Travel share price with a price target of $21.75 a share.

US and EU key to more earnings upgrades

But Morgans isn’t alone in recommending the Corporate Travel share price as a “buy”. UBS reiterated its bullish rating on the shares as it noted the group’s leverage to the US and EU markets.

“The vaccine roll-out is well-advanced in the US/UK and remains the key catalyst for travel to materially lift,” said UBS.

“CDC US guidelines state fully vaccinated citizens can travel domestically & internationally without quarantining after travel.

“Meanwhile, international travel in the UK could potentially resume on 17 May with ‘green countries’.”

More room for the Corporate Travel share price to climb

The US accounts for around 45% of Corporate Travel’s proforma EBITDA while Europe makes up around 20%.

UBS’ 12-month price target is $22 a share, but it could upgrade this if there are more tangible signs of a travel recovery in the US and Europe.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Brokers favourite ASX share for the COVID-19 reopening trade appeared first on The Motley Fool Australia.

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