Why are Web Travel Group shares surging more than 10%?

Web Travel Group Ltd (ASX: WEB) shares have surged more than 10% after the company announced strong revenue guidance for the first half of FY27 and a $90 million share buyback.

Web Travel Group is bouncing back

In a statement to the ASX on Tuesday morning, the company said that its first-half revenue for FY27 was expected to be up 11% to 15% on the same period last year.

The company's underlying earnings were also likely to be up on the same period last year, with Web Travel predicting underlying EBITDA of $80 to $86 million despite currency headwinds compared with the first half last year.

For the first half last year, underlying EBITDA was $81.7 million.

The company also said its total transaction volume (TTV) margin was expected to be about 6.7%, up from 6.5%.

Web Travel also announced a buyback of up to $90 million worth of shares, saying, "The Board does not believe the current share price appropriately reflects the Company's trading performance, cash generation and medium-term earnings outlook''.

Web Travel Group Managing Director John Guscic said regarding the company's performance:

Our WebBeds business continues to deliver TTV growth with enhanced margin. 1H27 is on track to be the third consecutive 6-month period where TTV margins have improved over the prior corresponding period. The optimisation initiatives and investments we made in FY26 are delivering and AI-led investments continue to drive our operating leverage. The Company is focused on maximising shareholder value. We have strong liquidity following redemption of the convertible notes in April and a share buy-back demonstrates the Board and management's confidence in the Company's financial strength and outlook.

A further trading update will be provided at the company's annual general meeting on August 27, the company said.

The buyback will be targeting just less than 10% of the company's shares, given it is currently valued at $1.02 billion, and will be funded out of the company's cash reserves.

Web Travel Group shares have been underperforming

Web Travel Group shares have been on the slide recently, and over a 12-month period, are down 39.3%.

They were trading 11.4% higher at $3.12 on Tuesday morning.

Broker Morgans recently upgraded Web Travel Group, and has a $3.75 price target on the stock.

The broker said:

After material share price weakness, we upgrade WEB to a BUY rating. The company is worth materially more than the current share price. We know from past economic and geopolitical events, that after a downturn, travel demand rebounds and so will its earnings and share price.

The post Why are Web Travel Group shares surging more than 10%? appeared first on The Motley Fool Australia.

Motley Fool contributor Cameron England 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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