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Why Webjet shares are soaring today

Tom Richardson
Halong bay Vietnam

Webjet Limited (ASX: WEB) shares are 5 per cent higher at $13.10 this morning after the digital travel business told investors to expect underlying EBITDA between $157 million to $167 million over FY 2020. The mid-point of its guidance would equal an increase around 37% over the prior year.

The star performer is the WebBeds business that is forecast to deliver 25% organic EBITDA growth after adjusting for the impact of the DOTW acquisition.

WebBeds effectively acts as a digital middleman between hotels and travel operators that book rooms on a wholesale basis.

Group travel is still a growing industry as its more cost effective and travellers from regions like Asia and the Middle East enjoy the perceived security and other advantages of it.

As the middle classes rise in these large emerging markets it’s possible demand for WebBeds’ services continues to rise over the long term. 

Webjet’s eponymous consumer-facing travel booking website in Australia is not growing so strongly and the competition it faces is a potential weak link. 

Overall though Webjet’s performance is relatively strong in the context of Flight Centre Travel Group Ltd (ASX: FLT) reporting the local leisure travel market is weak on the back of a slowing economy. 

The post Why Webjet shares are soaring today appeared first on Motley Fool Australia.

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Motley Fool contributor Tom Richardson owns shares of Webjet Ltd. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019