Investors took flight from a number of travel shares following the market holiday break as recession fears loom. Webjet (ASX:WEB) and Flight Centre Travel (ASX:FLT) shares were both down around 4% in afternoon trading. Webjet shares plunged to a day low of AU$5.04 and Flight Centre Travel shares hit a day low of AU$15.26.
The companies provide travel management services within the leisure and business travel markets.
Both stocks fell along with other shares in the consumer discretionary sector, including Aristocrat Leisure Limited (ASX:ALL) and Corporate Travel Management Limited (ASX:CTD). The S&P/ASX 200 Consumer Discretionary (XDJ) index dropped more than 4.5% for the day.
Rising interest rates and growing recession fears may be beginning to weigh down investor sentiment towards the sector. If tough economic times cause consumers to cut discretionary spending, such as travel, businesses like Webjet and Flight Centre Travel could be impacted.
There has been a strong rebound in travel from pandemic lows recently. However, a recession could impinge on future growth.
Webjet share price prediction
According to TipRanks’ analyst rating consensus, Webjet stock is a Moderate Buy. The average Webjet share price prediction of AU$6.25 implies over 20% upside potential. The stock is receiving favourable mentions on financial blogs. TipRanks data shows that financial blogger opinions are 100% Bullish on WEB, compared to a sector average of 69%.
Flight Centre Travel share price forecast
According to TipRanks’ analyst rating consensus, Flight Centre Travel stock is a Hold. The average Flight Centre Travel share price forecast of AU$17.55 implies over 15% upside potential. The share is down about 15% from where it began the year, and insiders can be seen buying the dip.
TipRanks’ Insider Trading Activity shows that Insider Confidence Signal is currently Positive on Flight Centre Travel. Corporate insiders in the company have purchased AU$3,400 shares in the company over the past three months.
With rapidly rising interest rates, recession fears may turn investors off the travel stocks. However, the potential downturn could be more manageable than the pandemic for companies in the sector, such as WebJet and Flight Centre.