{"id":9184,"date":"2024-05-06T20:20:11","date_gmt":"2024-05-06T20:20:11","guid":{"rendered":"https:\/\/economicherald.net\/?p=9184"},"modified":"2024-05-06T20:20:11","modified_gmt":"2024-05-06T20:20:11","slug":"despite-slowdown-in-travel-this-broker-is-bullish-on-helloworld-gives-it-a-big-price-target","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=9184","title":{"rendered":"Despite slowdown in travel, this broker is bullish on Helloworld, gives it a big price target"},"content":{"rendered":"<p>Jarden gives Helloworld Travel an Overweight rating with a big target price<br \/>\nHelloworld is a $400m market capped firm that offers various travel services globally<br \/>\nDespite a slowdown in travel, Jarden remains optimistic about Helloworld\u2019s future<\/p>\n<p>\u00a0<\/p>\n<p><strong>Jarden Research<\/strong> has slapped an <strong>Overweight rating<\/strong> on <strong><a href=\"https:\/\/stockhead.com.au\/company\/helloworld-travel-hlo\/\">Helloworld Travel (ASX:HLO)<\/a><\/strong>, with a <strong>target price of $3.70<\/strong> (versus current price of $2.49).<\/p>\n<p>Helloworld is a $400m-market capped travel company that offers all sorts of travel goodies, from local getaways to trips around the globe.<\/p>\n<p>The company was launched in 2013 after the consolidation of legacy brands <em>Harvey World Travel<\/em>, <em>Travelscene<\/em>,<em> Jetset<\/em> and <em>Travelworld<\/em>. A merger with <em>The AOT Group<\/em> followed in 2016, and the business name was changed to <strong>Helloworld Travel<\/strong> in 2017.<\/p>\n<p>Helloworld now has its fingers in three main pies: Retail, Wholesale, and Inbound travel, with a workforce of over 600 spread across Australia, New Zealand, Fiji, and even Europe.<\/p>\n<p>The company is also into cruising, with <em>SevenOceans Cruising<\/em> and <em>Cruise Co<\/em> its go-to brands for all things cruise-related.<\/p>\n<p>\u00a0<\/p>\n<h2>First, the not so good news<\/h2>\n<p>The latest Q3 report on HLO\u2019s performance confirmed a slowing growth trend despite the <strong>Express Travel Group (ETG)<\/strong> acquisition.<\/p>\n<p>While the results matched expectations, the figures suggested a decline in like-for-like EBITDA when excluding the ETG acquisition.<\/p>\n<p>The Q3 Total Transaction Value (TTV) saw a significant year-on-year increase of 43%,but revenue margin dropped by around 140 basis points, and EBITDA margin fell by 400 basis points.<\/p>\n<p>The company has attributed the declining TTV to various factors, including improved airline capacity and airfare pricing in the ANZ region.<\/p>\n<p>As for margins, the decline was mainly due to the impact of ETG acquisition and changes in product mix.<\/p>\n<p>However, there was some positive news regarding <strong>Logistix<\/strong> (a division of Helloworld handling concerts logistics etc), which recovered after a soft first half of the year.<\/p>\n<p>In its update, Helloworld also reiterated its EBITDA guidance for FY24, expecting it to range between $64 million and $72 million, with Jarden\u2019s forecast aligning closely to the midpoint.<\/p>\n<p>\u00a0<\/p>\n<h2>Now the good news<\/h2>\n<p>Despite the soft update, Jarden says its outlook on Helloworld remains optimistic, and it retains an Overweight rating on HLO.<\/p>\n<p>\u201cHLO is a capital-light business, and we expect to see its operating free cash flow accelerate through FY25 and beyond via the ETG acquisition, cost fractionalisation, and override realisation,\u201d says Jarden.<\/p>\n<p>\u201cIn our view, the above, coupled with HLO\u2019s strong balance sheet position and proven M&amp;A track record, is not reflected in the current price.\u201d<\/p>\n<p>And despite signs of softening demand in the travel sector, Jarden believes HLO\u2019s end-market exposure (baby boomers) and improving ROIC (return on invested capital) all warrant a higher price\u00a0multiple.<\/p>\n<p>\u201cWe note HLO\u2019s share price continues to lag those of its peer set, with potential for the gap to close if management can build confidence on improving underlying EBITDA and margin expansion\u2026\u201d says Jarden.<\/p>\n<p>The broker also noted management\u2019s historical conservatism in guidance.<\/p>\n<p>\u201cAs leisure remains resilient and we moves towards pre-COVID levels in FY25, it could suggest upside if HLO has a better 4Q, which is seasonally\u00a0 stronger, albeit there was little evidence of this in the 3Q update or commentary,\u201d said Jarden.<\/p>\n<p>\u00a0<\/p>\n<h2>Helloworld share price today:<\/h2>\n\n<p><span class=\"mce_SELRES_start\">\ufeff<\/span><span class=\"mce_SELRES_start\"><\/span>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><em>The views, information, or opinions expressed in the interview in this article are solely those of the broker and do not represent the views of Stockhead.<\/em><\/p>\n<p><em>Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.<\/em><\/p>\n<p><span class=\"et_bloom_bottom_trigger\"><\/span><\/p>\n<p>The post <a href=\"https:\/\/stockhead.com.au\/experts\/despite-slowdown-in-travel-this-broker-is-bullish-on-helloworld-gives-it-a-big-price-target\/\">Despite slowdown in travel, this broker is bullish on Helloworld, gives it a big price target<\/a> appeared first on <a href=\"https:\/\/stockhead.com.au\/\">Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>Jarden gives Helloworld Travel an Overweight rating with a big target price Helloworld is a $400m market capped firm that offers various travel services globally <a href=\"https:\/\/economicherald.net\/?p=9184\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":0,"featured_media":9185,"comment_status":"","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-9184","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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