On Friday, Despegar.com (NYSE:DESP), an online travel company, received a price target increase from Cantor Fitzgerald to $17.00, up from the previous $14.00. The firm maintained its Overweight rating on the stock. The revision followed Despegar.com's reported earnings, which showed a record adjusted EBITDA margin of 22.4% and outperformed consensus estimates for gross bookings and net revenue.
The company's financial results exceeded expectations, with gross bookings and net revenue surpassing consensus estimates by 0.4% and 1.9%, respectively. The strong performance was attributed to robust top-line growth and strict expense management, leading to significant beats on adjusted EBITDA and adjusted net income for the quarter.
Despegar.com has reiterated its full-year revenue guidance, expecting at least $820 million, signaling a substantial growth acceleration in the second half of 2024. Additionally, the company has increased its adjusted EBITDA guidance to at least $155 million, up from the previous forecast of $150 million.
This guidance adjustment is a result of the company's strategic investments in its business-to-business products and loyalty programs, both of which have demonstrated strong growth.
In response to the company's financial achievements and updated guidance, Cantor Fitzgerald has raised its adjusted EBITDA estimates for 2024 and 2025 by 4.9% and 2.1%, respectively. The new price target of $17 is based on an 8.5x multiple of the estimated 2024 enterprise value to EBITDA, an increase from the earlier 7.5x multiple.
Despite Despegar.com's shares experiencing a significant year-to-date increase of 32.6%, compared to the IWM's 3.6% rise, and an additional approximate 11.5% surge in after-hours trading, Cantor Fitzgerald suggests that the stock's re-rating story still has potential for further growth.
InvestingPro Insights
As Despegar.com (NYSE:DESP) garners attention with its upwardly revised price target and impressive financial performance, insights from InvestingPro provide a deeper dive into the company's fiscal health and market position. An InvestingPro Tip highlights that Despegar holds more cash than debt on its balance sheet, which may offer a cushion against market volatility and enable further strategic investments. Additionally, the company's gross profit margins stand out, with a notable 67.65% as of the last twelve months ending Q4 2023, reflecting efficient operations and a strong value proposition in the online travel industry.
InvestingPro Data underscores the company's robust revenue growth, which was up 31.24% for the last twelve months as of Q4 2023, and an even more impressive quarterly growth rate of 39.93% for Q4 2023. These figures complement the positive narrative from the earnings report and support the raised guidance for future revenue. Furthermore, the stock's performance has been noteworthy, with a 3-month price total return of 46.84% and a 1-year return of 112.54%, suggesting a strong market endorsement of Despegar's strategy and execution.
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