Webjet Group (WEB) shares soared after the company announced its bookings are now tracking at 95% of pre-pandemic levels, bouncing back strongly from the COVID-19 induced tourism industry downturn.
Webjet presented the positive news at its AGM, along with a raft of other impressive figures that signal promising times ahead for the global travel business.
All Webjet Group’s businesses are profitable in the FY23 year to date. And cash surplus from operations is expected to be more than $A100 million at the six months ending 30 September 2022.
Webjet shares surged on the back of the news, jumping more than 10% during morning trading.
The COVID-19 travel recovery
It’s a welcome turnaround for Webjet, which registered heavy losses in the aftermath of the COVID-19 outbreak and resultant downturn in global travel.
This week’s strong results further demonstrate the Australian travel industry’s recovery, after it suffered an $A11 billion hit to domestic tourism spending between April and May 2020, according to Tourism Research Australia.
John Guscic, Webjet’s Managing Director said the company is now seeing the results of the necessary business transformations it undertook during COVID-19, to ensure it would emerge stronger when travel returned.
“Based on current performance, we expect the company to exceed pre-pandemic earnings in FY24, well ahead of when the broader travel market is anticipated to return to 2019 levels,” he said.
Is Webjet a buy?
Webjet has a Hold consensus rating, based on one Buy, one Hold and one Sell recommendation.
The Webjet target price is A$5.48, which represents a change of -0.20% on the current price level.
The price target has a high forecast of $A6.94 and a low of $A4.00.
While Webjet is in a much stronger position than it was in the early days of the pandemic, global forces remain an ongoing risk. The company has cited the war in the Ukraine, high inflation, global supply chain problems, as well as the lingering pandemic, as issues that could impede industry growth in the future.