On Thursday, RBC Capital Markets updated its outlook on Webjet Limited (WEB:AU) (OTC: WEBJF) shares, increasing the firm's price target to AUD10.00 from the previous AUD9.50. The investment firm has maintained its Outperform rating on the stock.
The revision of the price target comes amid considerations of Webjet's proposed demerger. RBC Capital Markets does not anticipate an immediate multiple re-rate for either of Webjet's divisions as a direct result of the demerger.
The firm's analysis suggests that the potential benefits of the demerger would be realized through the simplification of business operations, the establishment of dedicated management teams, and the implementation of focused governance structures.
The analyst from RBC Capital Markets indicates that these steps could contribute to the derisking of Webjet's ambitious long-term growth targets. This could unlock value for shareholders by making the company's objectives more attainable and transparent.
Additionally, the analyst noted that the review of Webjet's structure, coupled with the company's significant cash reserves, might attract the attention of potential buyers. The underlying attractiveness of Webjet's business operations and the strategic review could potentially lead to interest from other companies or investors.
In the analyst's words, "Retain Outperform, $10/share PT." This statement reaffirms the positive stance on Webjet's stock, suggesting confidence in the company's future performance and the strategic actions it is undertaking. The raised price target reflects this optimism and the potential for value creation through the proposed corporate actions.
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