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On Tuesday, UBS analysts revised their rating for Corporate Travel Management (CTD:AU) (OTC:CTMLF), moving from a "Neutral" stance to a "Buy." The firm also adjusted the price target for the company’s shares to AUD13.55, down from the previous target of AUD17.60. The upgrade comes amidst a challenging macroeconomic environment, with particular emphasis on uncertainties in the US geopolitical landscape that have cast a shadow over the global travel industry.
The analysts at UBS acknowledged the potential for a softer operating climate extending into the fiscal year 2026, incorporating a decrease in spend per customer by 6% in the US and by 1.5% to 1.8% in other regions into their projections. Despite these headwinds, they highlighted Corporate Travel Management’s significant new business growth, which has seen its total transaction value (TTV) increase from $1 billion per annum to $1.6 billion in FY25.
UBS anticipates that the new business wins will contribute to a 17% revenue growth at full run-rate, although they have factored in a more conservative 14% increase for FY26E. The analysts also pointed to the potential benefits from the global rollout of the Sleep Space initiative and cost efficiencies expected from Project Atlas, which they believe could bolster earnings for Corporate Travel Management even against a backdrop of macroeconomic challenges.
The UBS team concluded that while there is uncertainty in their assumptions, which presents both upside and downside risks, they consider the current share price, which has fallen 33% since the February 25 financial results, to reflect these risks adequately. This suggests that the market may have already priced in the anticipated challenges, providing a more favorable entry point for investors.
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