On Thursday, Barclays updated its outlook on Booking Holdings (NASDAQ:BKNG), increasing the price target to $5,100 from the previous $4,500, while keeping an Overweight rating on the stock. The adjustment follows Booking Holdings' third-quarter financial results, which surpassed consensus expectations in several key metrics.
The company reported third-quarter room nights, revenue, and adjusted EBITDA that were 3%, 5%, and 9% higher than consensus estimates, respectively. The adjusted EBITDA exceeded expectations by $295 million. The upbeat results have led to a more optimistic tone compared to the sentiment in August, with the full-year 2024 guidance for bookings and revenue also being revised upwards.
The improved financial outlook is attributed in part to stronger performance in Europe and a significant 14% growth in room nights for alternative accommodations. According to Barclays, this segment is outpacing competitors like Airbnb. Additionally, Asia is gaining focus due to its scale—accounting for 24% of global room nights—and is expected to be the highest growth region in the industry in the coming years.
Barclays also noted early-stage initiatives in artificial intelligence at Booking Holdings and anticipates increased attention on this area and advertising opportunities as the company moves into 2025. Despite some caution regarding the acceleration of top-line metrics into 2025 as currently expected by consensus, Barclays maintains that Booking Holdings is a top pick in the sector.
The firm's analysis considers the strong third-quarter performance as a sign of sustained travel demand, at least outside the United States, and has incorporated these factors into their valuation framework extending to the fiscal year 2026 GAAP EPS.
In other recent news, Booking Holdings surpassed Wall Street predictions for its third-quarter earnings, largely due to robust international travel, particularly in Europe and parts of Asia. The company reported an 8% growth in room nights and gross bookings valued at $43.4 billion, a 9% rise from the previous year. The firm achieved an adjusted profit of $83.89 per share and total revenue of $7.99 billion for the quarter, both surpassing analyst expectations.
Benchmark reaffirmed its Buy rating on Booking Holdings, while Oppenheimer raised its price target to $5,000, maintaining an optimistic outlook. However, Goldman Sachs reiterated a Neutral rating, pointing out potential for margin expansion and long-term growth.
Truist Securities initiated coverage of Booking Holdings with a Hold rating, highlighting potential growth avenues such as the Connected Trip strategy and the Genius loyalty program, despite a forecast of moderating macro travel growth. These recent developments reflect the strategic approach and future prospects of Booking Holdings.
InvestingPro Insights
Booking Holdings' strong performance, as highlighted in the article, is further supported by real-time data and insights from InvestingPro. The company's market capitalization stands at an impressive $149.65 billion, reflecting its dominant position in the travel industry.
InvestingPro Tips reveal that Booking Holdings has been aggressively buying back shares, which aligns with the company's robust financial performance and could potentially boost shareholder value. Additionally, the company boasts impressive gross profit margins, which is evident in the reported gross profit margin of 84.57% for the last twelve months as of Q2 2024. This high margin supports the company's ability to generate strong profits from its revenue, which totaled $22.4 billion over the same period.
The company's strong financial position is further underscored by its revenue growth of 15.81% over the last twelve months, outpacing the 7.27% quarterly growth reported in Q2 2024. This growth trajectory supports Barclays' optimistic outlook and increased price target.
It's worth noting that InvestingPro offers 16 additional tips for Booking Holdings, providing investors with a comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable for those looking to make informed investment decisions in the dynamic travel industry.
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