The Webjet share price recovered 20% in 2022. Is this just the beginning?

A little boy in flying goggles and wings rides high on his mum's back with blue skies above.

A little boy in flying goggles and wings rides high on his mum's back with blue skies above.

The Webjet Limited (ASX: WEB) share price returned to form and was a market beater in 2022.

As you can see below, during the 12 months, the online travel agent’s shares rose a sizeable 19.5%.

This compares favourably to the ASX 200 index, which declined 5.5% during the same period.

What drove the Webjet share price higher?

Investors were buying Webjet shares last year after its recovery from the pandemic gathered pace.

For example, in FY 2022 Webjet reported a 261% increase in total transaction value (TTV) to $1,638 million and a 258% jump in revenue to $138 million.

And while Webjet still posted an underlying loss of $38.4 million for the 12 months, management revealed that the company was profitable during the second half and delivered positive cash flow. In light of this result, a return to profit was now expected in FY 2023.

The good news is that Webjet is on course to achieve this. In November, the company released its half year results for FY 2023 and revealed an underlying half year profit after tax of $32 million.

The even better news was that the company was on track to exceed pre-pandemic profitability in FY 2023, with second half EBITDA expected to exceed pre-pandemic levels by at least $10 million.

Investors responded positively to what Managing Director John Guscic described as a “spectacular turnaround” for the company, which led to the Webjet share price shooting higher on the day.

Will its shares continue to rise in 2023?

Webjet shares may have smashed the market last year, but a number of brokers still believe they can keep rising.

For example, Goldman Sachs has a conviction buy rating and $6.90 price target on the company’s shares. This implies potential upside of 10% for Webjet shares over the next 12 months.

The team at Morgans is also bullish and has an add rating and $7.20 price target.

Based on the current Webjet share price of $6.27, this suggests potential upside of 15% for investors this year. Morgans commented:

In our view, WEB hasn’t wasted a crisis and will come out of COVID with a materially lower cost base, consolidated systems and a large business in the US. With plenty of market share still to win, we maintain an Add rating on WEB.

The post The Webjet share price recovered 20% in 2022. Is this just the beginning? appeared first on The Motley Fool Australia.

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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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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