Here’s why this travel share could be in the buy zone…
The post Broker says Webjet (ASX:WEB) share price weakness is a buying opportunity appeared first on The Motley Fool Australia. –
The Webjet Limited (ASX: WEB) share price is pushing higher on Friday.
In afternoon trade, the online travel agent’s shares are up 1% to $4.88.
Why is the Webjet share price pushing higher?
The catalyst for the rise in the Webjet share price today appears to be a broker note out of Goldman Sachs.
According to the note, the broker believes investors should stick with Webjet despite the difficult trading conditions it is facing right now. Goldman Sachs has held firm with its buy rating and $6.40 price target. This implies potential upside of 31% over the next 12 months.
Its analysts aren’t as positive on rival Flight Centre Travel Group Ltd (ASX: FLT), though. They have retained their neutral rating and cut their price target by 8% to $18.40.
Goldman explained: “We revise our earnings forecasts for WEB and FLT to reflect the slower pace of Australian Domestic and International travel recovery, impacting our forecasts for the Webjet OTA business and FLT’s ANZ segment.”
“We revise our EBITDA forecasts by -24% and -0.1% respectively over FY22/23 for WEB. Our rounded 12m target price remains unchanged at A$6.40. Our earnings revisions are more significant for FLT at -29.4% and -18.6% respectively for FLT over FY22/23. Our revised 12m target price on FLT is at A$18.40, from A$20.00,” it added.
Why is this a buying opportunity?
Goldman Sachs believes the recent underperformance in the Webjet share price is a buying opportunity for patient investors. This is due to its belief that the company is well-placed for long term growth from the shift to online booking and its WebBeds business.
It explained: “While we note that the share prices have remained subdued over the past few months likely driven by negative international travel newsflow in Australia, we view this as a buying opportunity for WEB.”
“We expect WEB to be a structural beneficiary of travel recovery due to its exposures to the OTA and Bedbanks businesses. However, we remain concerned by the impact of prolonged border closures for FLT which has a significant international leisure business based from ANZ. We reiterate our Buy rating on WEB and Neutral rating on FLT,” it concluded.
Should you invest $1,000 in Webjet right now?
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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 owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.