Due to dilutionary impacts, Morgans is surprised the company has raised capital for the third time since covid-19 began. However, the broker continues to see the stock as fair value and retains the Hold rating and $4.92 price target.
The company has raised $250m through convertible notes to pay down term debt, fund the cash payment associated with the previous notes conversion and for general corporate purposes and growth.
The analyst explains benefits from the new notes includes reducing refinancing risk, a lowering of the liquidity covenant, further strengthening of the balance sheet by around $169m and a lowering of the interest rate (reduces interest expense by -$2.2m).
Target price is $4.92.Current Price is $5.40. Difference: ($0.48) – (brackets indicate current price is over target). If WEB meets the Morgans target it will return approximately -10% (excluding dividends, fees and charges – negative figures indicate an expected loss).