Webjet expects the collapse of Thomas Cook will reduce FY20 operating earnings (EBITDA) by up to -$7m. Thomas Cook also owes Webjet EUR27m in unpaid receivables.
Morgans removes the incremental contribution to earnings from forecasts and reviews depreciation & amortisation assumptions, which results in material downgrades.
While costs associated with integrating the Thomas Cook contracts have been embedded in the broader WebBeds business, Morgans had assumed an incremental improvement in earnings as the agreement shifted to a volume-based model from June 1, 2019.
Hold rating maintained. Target is reduced to $12.18 from $13.65.
Sector: Retailing.
Target price is $12.18.Current Price is $11.11. Difference: $1.07 – (brackets indicate current price is over target). If WEB meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
