Why is the Corporate Travel share price charging higher on Wednesday?

This travel company appears to believe that its shares are undervalued.

| More on:
Happy couple looking at a phone and waiting for their flight at an airport.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Corporate Travel Management Ltd (ASX: CTD) share price is catching the eye on Wednesday.

In morning trade, the corporate travel specialist's shares are up 3.5% to $17.06.

Why is the Corporate Travel share price pushing higher?

Investors have been buying the company's shares this morning after responding positively to the release of an announcement this morning.

According to the release, thanks to the strength of its balance sheet, the Corporate Travel board has decided to return funds to shareholders via an on-market share buy-back.

The company advised that it is implementing the buy-back program to repurchase up to a maximum of $100 million worth of Corporate Travel shares. It will commence on 15 November and run for approximately 12 months.

Management believes the share buy-back program enhances its shareholder returns and complements the company's intentions to pay dividends in the future.

It plans to buy back shares at such times and in such circumstances as it is considered beneficial to the efficient capital management of the company. Because of this, the buyback is therefore dependent on market conditions, volumes, and other relevant factors. The company advised that it reserves the right to suspend the buy-back program without notice or terminate it at any time.

In addition, it notes that the prices paid for shares purchased under the buy-back will be no more than 5% above the volume-weighted average price of its shares over the five trading days prior to the purchase.

Is this a good idea?

The team at Goldman Sachs is likely to approve of this move. Its analysts currently have a buy rating and a $20.50 price target on the company's shares. This implied a 24% upside from where the Corporate Travel share price ended Tuesday's session, which appears to indicate its belief that the company was materially undervalued.

Trading update

Also giving the Corporate Travel share price a boost today has been a trading update.

It revealed that first-quarter revenue increased 36% to $187.9 million and underlying EBITDA lifted 157.3% to $56.6 million.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management and Goldman Sachs Group. The Motley Fool Australia has recommended Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Travel Shares

Bored woman waiting for her flight at the airport.
Travel Shares

Guess which ASX 200 stock is down 9% on FY25 earnings guidance miss

This travel agent giant has disappointed investors with its results.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Broker Notes

Should you buy Qantas shares before reporting season? Here's what Macquarie recommends

We look at Macquarie’s expectations for the surging Qantas share price in FY 2026.

Read more »

A young woman wearing glasses and a red top looks at her laptop smiling
Travel Shares

Down 40% for the year: two shares I'd buy today

The shares have plunged over the past 12 months, but I still think there is opportunity ahead.

Read more »

Two people lazing in deck chairs on a beautiful sandy beach throw their hands up in the air.
Travel Shares

Guess which ASX All Ords travel stock just rocketed 17% on an earnings upgrade

Investors are piling into the ASX All Ords travel stock today. Here's what's happening.

Read more »

Woman on a tablet waiting in for her flight in an airport and looking through a window.
Travel Shares

Virgin Australia vs Qantas shares: Which is the best buy?

Competition in Australia's aviation market is heating up.

Read more »

A female cabin crew member on a place looks like she has a headache.
Travel Shares

Why this expert is calling time on Virgin Australia shares

A leading expert is calling time on Virgin Australia shares. But why?

Read more »

Couple at an airport waiting for their flight.
Travel Shares

Macquarie increases price target for Qantas shares

Qantas shares hit a new all-time high today.

Read more »

Happy woman trying to close suitcase.
Travel Shares

Guess which ASX travel stock Macquarie just named as its top pick with 32% upside?

While Macquarie sees value across the sector, it named a clear favourite. 

Read more »