The Webjet Limited (ASX: WEB) share price returned to form in October and pushed higher.
During the month the online travel agent's shares rose by a solid 7.5%. This compares favourably to a 0.4% decline for the S&P/ASX 200 index.
Why did the Webjet share price charge higher last month?
It looks as though bargain hunters were buying the company's shares last month after a sharp pull back over the previous few months.
For example, early in October Webjet's shares drifted to a 52-week low of $9.98. This was a massive 42% lower than the 52-week high it reached in May.
The catalyst for this was largely the underperformance and then bankruptcy of its UK partner Thomas Cook.
The Thomas Cook collapse has come at a cost to Webjet due to its unpaid receivables of €27 million. It also loses a revenue source and is expected to reduce Webjet's WebBeds EBITDA growth by up to $7 million in FY 2020.
Whilst this is clearly disappointing, the good news is that the rest of Webjet's business is still performing strongly.
At the recent Goldman Sachs 3rd Annual Tech Day, Webjet spoke very positively about its future prospects and still sees significant growth ahead.
This is particularly the case for its B2B business in Asia. It advised that the B2B landscape is highly fragmented and still in the early stages of evolution, with significant opportunities for growth.
Broker recommendation.
As well as its event appearance, a broker note out of Ord Minnett appears to have given its shares a boost.
According to the note, its analysts have retained their buy rating and lifted the price target on its shares to $20.20.
The broker continues to believe that Webjet's share price weakness is a buying opportunity for investors and feels it is capable of growing its EBITDA by a CAGR of almost 14% over the next ten years.
Should you invest?
Despite its rebound in October, I think Webjet's shares are still in the bargain bin. At just 17x estimated full year earnings, I feel Webjet is cheap given its long-term growth potential.
As a result, I would class it as a buy and choose it ahead of travel booking rivals Flight Centre Travel Group Ltd (ASX: FLT) and Helloworld Travel Ltd (ASX: HLO).
