The Corporate Travel Management Ltd (ASX:CTD) share price continued its positive run and hit a 52-week high on Friday. Here’s why…
The post Why the Corporate Travel Management (ASX:CTD) share price just hit a 52-week high appeared first on The Motley Fool Australia. –
Although it is on course to end the week in the red, at one stage today the Corporate Travel Management Ltd (ASX: CTD) share price climbed to a 52-week high of $22.07.
When the corporate travel booker’s shares hit that level, it meant they were up 29% since the start of 2021.
Why is the Corporate Travel Management share price at a 52-week high?
Investors have been buying Corporate Travel Management shares this year thanks to the rollout of COVID vaccines and the release of a better than expected half year result in February.
In respect to the latter, for the six months ended 31 December, the company reported an 88% decline in total transaction value (TTV) to $403.8 million and a 75% reduction in half year revenue (excluding government grants and other income) to $56.5 million.
If you include government grants of $13.7 million and other income of $4 million, its revenue was down 67% over the prior corresponding period to $74.25 million.
This ultimately led to Corporate Travel Management posting an underlying loss after tax of $26 million and a statutory loss after tax of $36.4 million. This compares to a pre-COVID statutory profit of $32.9 million a year earlier.
Positively, Corporate Travel Management was well-positioned financially to deal with this loss. At the end of the period it had net cash of $119 million and a $178 million undrawn committed finance facility.
And given that trading conditions are improving now, Corporate Travel Management looks set to have a sizeable cash balance leftover when the pandemic passes. This could give it the firepower to make further earnings accretive acquisitions, like the Travel & Transport purchase last year.
What else is support its shares?
A positive reaction to its results by brokers has also given the Corporate Travel Management share price a boost.
For example, both Bell Potter and Credit Suisse put the equivalent of buy ratings and $22.00 price targets on its shares.
However, with the Corporate Travel Management share price now trading in and around this level, the upside could be limited in the near term until another catalyst appears.
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Motley Fool contributor James Mickleboro 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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.