We covered WEB in July (here) following a solid result in May, and news they are considering demerging two parts of their business, which we think is a good move, that will unlock value.
- At the time we suggested, we like WEB, but the risk/reward is not exciting above $9
Since then, the stock has retreated back towards $8, and the risk/reward has materially improved. The lack of short term interest is understandable, given WEB reports out of cycle (March year-end) and there are plenty of other stocks currently capturing the markets attention.
We ultimately think this proposed demerger could trigger a market re-rate, especially following the stocks’ 16% retracement following the panic buying after the initial news in May. We believe that businesses’ ability to focus on themselves as separate B2B and B2C entities will allow B2C growth to accelerate to double digits as a stand-alone entity.
- We like WEB as the stock drifts towards $8.
MM has added WEB to our Hitlist for our Active Growth Portfolio.
MM is bullish towards WEB
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