Webjet share price tipped to rise: Broker says it ‘hasn’t wasted a crisis’

Webjet shares could be about to ascend according to one broker…

| More on:
plane flying across share markey graph, asx 200 travel shares, qantas share price

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

Key points

  • A number of brokers have responded positively to Webjet's full-year results
  • One of those is Morgans, which as reiterated its add rating this morning
  • The broker notes that Webjet 'hasn't wasted as crisis'

The Webjet Limited (ASX: WEB) share price is having a decent finish to the week.

In afternoon trade, the online travel agent’s shares are up 1.5% to $5.96.

This follows a positive reaction from brokers to yesterday’s full-year results release.

What was the reaction?

Overall, the reaction to Webjet’s full-year results was positive, with a number of brokers, such as such as Citi, Goldman Sachs, Morgans, and UBS reiterating their buy ratings today.

According to the note out of Morgans, its analysts have retained their add rating with a $6.55 price target.

Based on the current Webjet share price, this implies potential upside of 10% for investors over the next 12 months.

What did the broker say?

Morgans was pleased with Webjet’s performance in FY 2022, noting that its “result was stronger than expected with TTV [total transaction value], revenue and cashflow beating” the broker’s forecasts.

Another positive that its analysts highlighted was the company’s strong start to the new financial year. It commented:

The 1Q23 bookings, TTV and EBITDA are all currently tracking well head of 4Q22. May is currently tracking ahead of April, which was WEB’s most profitable month since March 2020, with all business segments profitable. WEB continues to target a return to pre-COVID booking levels in the 2H23.

All in all, Morgans believes this shows that Webjet is well-placed for growth thanks to the hard work it put in during the COVID-19 crisis. This includes cost reduction initiatives that will reduce its cost base by 20% once the business returns to scale.

In our view, WEB hasn’t wasted a crisis and will come out of COVID with a materially lower cost base, consolidated systems and a large business in the US. We maintain an Add rating on WEB with a $6.55 price target

Based on our forecasts, WEB is trading on an FY24 recovery year PE of 19.5x, which is at a discount to its five-year average PE (pre-COVID) of 20.6x.

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. 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

a young girl wearing a set of airplane wings stands on a tarmac with hands in the air and an excited look on her face as though she is about to take off.
Travel Shares

Why this smaller ASX travel share is locking horns with Qantas over regulation

Here's the latest on Regional Express' battle with Qantas over regional flight routes.

Read more »

An airport ground staff worker holds two red beacons in either hand crossed above his head on a vast airport tarmac.
Travel Shares

Own Qantas shares? Here’s why the $5K staff bonus could be up in the air

Qantas sounds alarm bell on $5K bonus to employees

Read more »

A woman on holiday stands with her arms outstretched joyously in an aeroplane cabin.
Travel Shares

Qantas share price climbs as first direct flight to Europe touches down in Rome

Qantas shares are taking off today.

Read more »

A smiling boy holds a toy plane aloft while an unhappy girl watches on from a car near an airport runway.
Travel Shares

2 ASX travel shares buy-rated by experts that could take off

Travel is booming. These two picks by experts could take advantage of that.

Read more »

A woman ponders a question as she puts money into a piggy bank with a model plane and suitcase nearby.
Travel Shares

When might Corporate Travel shares start paying dividends again?

It;s been two years since investors saw a dividend from this ASX travel share...

Read more »

A couple are running late for their flight as they rush to the gate.
Travel Shares

These 2 ASX travel shares are tying the knot for the next 10 years

Rex has signed agreements with a number of travel agency groups, most noticeably Flight Centre.

Read more »

qantas share price
Travel Shares

Qantas share price takes off following market update

Qantas shares are on the move on Friday...

Read more »

two older men wearing colourful tropical patterned shirts and hats like tourists puzzle over a map one is holding while he other holds up a hand as if indicating he doesn't know where they are going.
Share Fallers

Why is the Webjet share price tailgating the ASX 200 today?

Volatility is continuing for the online travel agent on Thursday...

Read more »