The Webjet Limited (ASX: WEB) share price has performed exceptionally over the past 6 months. Although the digital travel business has continued to be suppressed by restrictions imposed as a result of the COVID-19 pandemic, the company's shares have surged.
Presently, shares in the $2.36 billion company are up 17% in the last 6 months. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has climbed a steady 4.6% over the same timeframe.
Considering that Webjet's revenue remains severely impacted by the pandemic, investors are likely wondering why the Webjet share price is outperforming the index. While the exact answer is up for interpretation, there are a few likely influencing factors.
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The reopening trade
Essentially, investors are beginning to see the light at the end of the tunnel for travel shares as vaccination rates near reopening levels. In fact, today marks 'Freedom day' for residents of New South Wales after the state batten down the hatches for 107 days.
This comes as NSW reaches 90.3% of the over 16-year-old NSW population receiving their first dose. Likewise, over 60% of Australians over 16 are now fully vaccinated. For reference, at 80% fully vaccinated, domestic travel restrictions will not apply to vaccinated residents. Additionally, outbound travel restrictions will be removed for those inoculated against the virus.
As a result, ASX-listed travel shares have gotten a boost recently as investors eye the eventual reopening of domestic and international travel. While the Webjet share price may have outperformed the benchmark index, other travel companies have outdone its performance in the past 6 months.
- Flight Centre Travel Group Ltd (ASX: FLT) up 22.6% to $22.35
- Corporate Travel Management Ltd (ASX: CTD) up 22.8% to $23.36
- Helloworld Travel Ltd (ASX: HLO) up 41.2% to $2.89
Webjet share price gets a buy rating
It is often supportive of a higher share price whenever an analyst considers it a 'buy'. In this case, analysts at UBS recently rated the Webjet share price a buy with a price target of $6.85.
According to the note, the broker expects pent-up demand for travel will be considered once restrictions are lifted. Hence, UBS' target suggests a potential 9.6% upside from the travel company's current share price.
