Webjet Ltd (ASX: WEB) shares are in the green today and are currently swapping hands at $7.21 apiece after the company underwent a major transformation last week.
It starts with the demerger of its consumer and business-to-consumer (B2C) operations, creating a new listed company, Webjet Group Ltd (ASX: WJL). It began trading on the ASX this week.
Webjet Group shares currently fetch 99.5 cents apiece, up more than 24% since the initial listing.
With the company looking to unlock value for its shareholders, investors are wondering whether Webjet shares are still worth considering. Let's see what the experts think.
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Are Webjet shares a buy?
Webjet shares fell sharply following the demerger, continuing a longer-term downtrend.
As a reminder, the existing consumer business – to be renamed WEB Travel on October 2 – will focus entirely on the B2B travel arm, WebBeds. It's ticker will remain "WEB".
Whereas the new company – Webjet Group Limited – looks after the consumer products end of the group with brands like GoSee and Trip Ninja. The ticker is "WJL".
Even though the reaction was swift, the declines aren't necessarily negative for the company's shareholders.
Webjet shareholders received 1 share in the newly listed entity for every Webjet share they owned, in a 1-for-1 ratio. So the drop in Webjet's share price is offset by the value created by the newly listed Webjet Group.
Analysts believe the move enhances the potential for even more capital growth.
According to RBC Capital Markets, Webjet shares could be well poised to grow. The broker identified the company as an "attractive pure-play" travel distribution business following the demerger.
RBC notes the company is targeting a compounding growth rate of approximately 17% until FY30 – far outpacing the market's projected growth of 7.7%. According to The Australian:
The company has a demonstrated track record of growing ahead of the broader global hotel wholesale market.
[Valuation] is justified by higher earnings before interest, taxes, depreciation and amortisation (EBITDA) growth expectations.
RBC rates Webjet a buy with a $8.50 price target.
What about other brokers?
Morgans is similarly optimistic about WEB Travel Group's post-demerger future. According to my colleague James, it retained its buy rating for Webjet, with a revised price target of $8.60.
Morgans highlights management's strong track record of capturing market share in the travel distribution sector.
Despite some potential softness in its upcoming financials, the broker expects Webjet's long-term growth trajectory to remain strong.
UBS also weighed in positively before the demerger, maintaining a buy rating with a price target of $10 for Webjet shares.
Foolish takeaway
Webjet shares are on investors' radar after the company's demerger, which has created two separate companies, each with distinct growth opportunities.
Webjet is up nearly 7% in the past year of trade.
