WEB -35.56%: Hit hard today on weak guidance. The newly separated B2B travel company said revenue margins would be 6.4% for the half, down from ~7% guidance which results in lower sales and a bigger hit to earnings. The market had been looking for sales of $186m and todays guidance implies ~$168m, a 10% miss and with a drop in margins, it implies earnings (EBITDA) of $74m relative to current consensus of $94m i.e. a 22% miss.
- The market applies a lower multiple to lower earnings, and as such, the stock was down a more aggressive 35%, which is about right in our view.
Lots of inbounds on this today, however, the fact they have lowered revenue margins in FY25/FY26 for the second time since initial guidance of 7-7.5% provided in the Mar-24 strategy day creates uncertainty regarding future earnings, so there is no rush to step in and buy this for now.
MM has turned neutral on WEB in the short term.
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