The news: Shares in Web Travel Group rose at market open on the ASX, after the B2B travel company’s first-half preliminary results triggered a hefty sell-off on Monday.
The numbers: Web Travel Group shares were up 1.1% to $4.58 by 10:45am AEDT, having shed around 35% on Monday.
A number of analysts made wholesale changes to their recommendations on the stock, including:
- Citi downgraded from ‘buy’ to ‘neutral’, slashed its target price from $8.25 to $5.55, and revised its EBITDA estimates by around -30% in FY25 and -20% in FY26;
- Jarden retained its ‘overweight’ rating but cut its target price from $7.70 to $7.10, and lowered its FY25 EBITDA forecast by 15%;
- Morningstar reduced its fair value estimate by 8% to $6 per share, and cut its underlying EBITDA forecasts by an average of 24% over the next three years; and
- Morgans stayed ‘equal-weight’ with a price target of $7.
The context: Citi analysts said its downgrade on Web Travel Group was a result of “increased uncertainty and the rapid pace of change”. They noted that rapid change in the group’s competitive environment could raise question marks around visibility, and whether there is elevated forecast risk.
Jarden analysts flagged that the company’s two downgrades in two months show competition is high and execution risk exists. However, they also noted that the share price reaction to the result “looks over done”.
Morningstar analysts said they view many of Web Travel Group’s near-term negative drivers as cyclical, including negative impacts from the collapse of tour operator FTI Group. They also consider the downside risks “are more than priced in” following Monday’s sell-off.
The sources: Citi research, Jarden research, Morningstar research, Morgans research
