Webjet Limited (ASX: WEB) shares are polarising investors at the moment.
As a leader in the online booking field, it feels like it will be a beneficiary of the post-COVID resurgence in travel.
However, it has had to raise capital multiple times since the pandemic struck just to stay alive. And in recent times, it has regularly featured at the top of the league table of most shorted stocks on the ASX.
This year Webjet shares started the year at $5.14 then rose to as high as $6.24. Now they have sunk down to $4.99 at the time of writing.
So if you were fortunate enough to buy this stock during the depths of coronavirus despair last year, do you take your winnings and run?
Three fund managers offered their take:
The case to sell Webjet shares
Sage Capital chief investment officer Sean Fenton reckons Webjet shares have had a good pandemic recovery run, and investors should cash in now.
"You might look at a share price chart and think 'wow, it's still cheap'. But they've done at least two,… maybe even three, equity issues in the last 12 months. Due to that, their market cap is now greater than it was pre-COVID," he told a Livewire video.
Despite the rollout of vaccines and more freedoms for travel, there are still too many immediate hurdles for the company.
"It's not necessarily the end of the pain in terms of generating cash flow for the business. For me, the value is not there for a company with so much uncertainty and earnings risk."
The case to not sell Webjet shares
Perpetual portfolio manager Anthony Aboud would hold onto Webjet.
He thinks it's "dangerous" to sell at the moment due to almost 10% of its stocks being shorted.
"With a big short interest like that, it can be dangerous to be short here," said Aboud.
"One thing working in their favour is that this is one of the companies people go to for exposure in the reopening trade. But I do agree with Sean. It has a higher enterprise value now than pre-COVID and I'm not 100% sure that the outlook is better."
The case to buy Webjet shares
Not everyone is pessimistic about Webjet.
The Motley Fool reported last month that Ord Minnett brokers retained their buy rating for the online travel agency. The price target was even raised to $7.15, which would be a more than 40% gain from the current level.
"The broker believes the company is well-positioned financially to strengthen its competitive position in the B2B segment," wrote my colleague James Mickleboro.
"This is due to a number of its competitors struggling financially during the pandemic."
