The Webjet Limited (ASX: WEB) share price has been a solid performer on Wednesday.
In afternoon trade, the online travel agent's shares are up 2% to $5.26.
Why is the Webjet share price rising?
Investors have been buying the company's shares today after it was the subject of a bullish broker note out of Goldman Sachs.
While Goldman has been bullish on the company for a while, it has become even more positive this week. So much so, the broker has added Webjet's shares to its coveted conviction list.
According to the note, the broker has put a conviction buy rating and $6.50 price target on its shares.
Based on the current Webjet share price of $5.24, this implies potential upside of 24% for investors over the next 12 months.
What did the broker say?
Goldman believes that Webjet is well-placed for long term growth thanks partly to its Bedbanks business.
It also believes that the valuation of the Webjet share price will start to improve in the near future as the company demonstrates its strong recovery from the pandemic.
Goldman commented:
WEB is a structural beneficiary of the recovery from COVID with favorable exposure to the growing online channel and, more importantly, a strong positioning and improving scale in the niche Bedbanks segment. WEB has also demonstrated strong cash generation as the market recovers and valuation continues to be impacted by macro concerns.
We expect the valuation should start decoupling to reflect the fundamental strength of the company as opposed to being in line with other travel intermediaries in the short term. We are Buy rated with a 12m TP of A$6.50, implying 31% upside and total potential return of 34%, the largest upside across our Consumer services coverage. We add WEB to our ANZ Conviction List.
