On Thursday, Cantor Fitzgerald initiated coverage on Airbnb Inc. (NASDAQ:ABNB) with an Underweight rating and a 12-month price target of $94.00. The firm pointed to potential challenges for the company, including a slowdown in revenue per available room (RN) and bookings growth, which could affect the stock's performance in the near future.
According to the firm, while Airbnb continues to innovate and has significant opportunities to expand its market and product offerings, there are near-term concerns. These include "product cycle air pockets" and a moderation in demand that may weigh on the company's growth metrics in the next 12 to 18 months.
Cantor Fitzgerald highlighted that Airbnb has fallen short of the Street's day-after earnings RN forecasts in four out of the past five quarters. Furthermore, the firm expressed skepticism regarding the consensus forecast of a 9% RN growth for fiscal year 2025, suggesting this could lead to an unfavorable situation for Airbnb's valuation.
The firm's analysis also noted that Airbnb's shares are currently trading at 26 times GAAP earnings per share, which represents a 23% premium compared to the average of its online travel agency (OTA) peers. Given this valuation and the converging growth rates within the group, Cantor Fitzgerald indicated it is challenging to envision the stock maintaining its current valuation if negative revisions continue.
In other recent news, Airbnb Inc. has been the subject of several financial developments. BTIG maintains a Buy rating on Airbnb stock, expressing confidence in the company's pipeline of treatments for inflammation and immunology.
The firm's optimism is bolstered by the successful completion of a PIPE financing in the previous month, which saw significant investment from Sanofi (NASDAQ:SNY). Airbnb's management anticipates positive Phase 2b results could validate the efficacy of PD-1 agonists in treating rheumatoid arthritis.
On the earnings front, Airbnb reported an 11% year-over-year increase in total revenue in Q2, reaching $2.75 billion, and a similar rise in gross bookings value to $21.2 billion. However, its Q2 profit decreased to $555 million or 86 cents per share, from $650 million or 98 cents per share last year. The company's Q3 revenue is projected to fall short of expectations, ranging between $3.67 billion and $3.73 billion.
Several firms, including TD Cowen, BMO Capital Markets, RBC Capital, and Citi, have reduced their price targets for Airbnb. Despite these adjustments, TD Cowen, Citi, and Benchmark maintain a Buy rating, indicating continued confidence in the company's viability as an investment. KeyBanc has reiterated a Sector Weight rating on Airbnb, indicating a neutral stance on the company's stock.
InvestingPro Insights
As Cantor Fitzgerald casts a cautious eye on Airbnb's near-term prospects, real-time metrics from InvestingPro paint a nuanced picture of the company's financial health and market valuation. Airbnb boasts a robust gross profit margin of 82.59% over the last twelve months as of Q2 2024, indicating efficient cost management relative to its revenue of $10.51 billion during the same period. This impressive margin aligns with one of the InvestingPro Tips highlighting Airbnb's ability to maintain high profitability in its operations.
Furthermore, despite concerns about the company's growth trajectory, Airbnb's current P/E ratio stands at 15.13, suggesting a relatively reasonable valuation when considering its near-term earnings growth. The company's market capitalization of $72.86 billion reflects its substantial presence in the market, and with a PEG ratio of just 0.13, investors may find Airbnb's stock to be an attractive proposition when factoring in its earnings growth potential.
InvestingPro offers a wealth of additional insights, with 14 more tips available that could further inform investment decisions. For instance, while some analysts have revised their earnings expectations downward, Airbnb holds more cash than debt, which could provide a buffer against potential downturns. Additionally, despite recent price declines, Airbnb continues to trade at a premium based on revenue, EBIT, and book value multiples, which may suggest investor confidence in the company's long-term value proposition. To explore these nuances in greater depth, investors can visit InvestingPro for a comprehensive analysis.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.