On Friday, JPMorgan Chase revised its price target on Booking Holdings Inc. (NASDAQ:BKNG) shares to $3,860, down from $4,025, while maintaining an “overweight” rating on the stock.
The company’s analysis cited a mix of results from the company’s second-quarter performance and future expectations. Booking Holdings reported a 7% year-over-year increase in room nights in the second quarter, in line with expectations and exceeding the company’s own guidance.
However, growth is expected to slow in the third quarter due to lower expansion of booking windows compared to previous quarters and slower growth across Europe.
Booking Holdings’ overall bookings growth is impacted by a shift towards regions with lower average daily rates and pressure on airfare prices.
As a result, third-quarter guidance was less robust than expected, and the full-year outlook did not receive the positive revision that investors had anticipated.
On a brighter note, Booking Holdings raised its revenue growth forecast slightly from “slightly faster than 7%” to “more than 7%” and raised its EPS growth forecast from “14%+” to “15%+.”
Despite these adjustments, the company’s overall bookings growth guidance has been lowered from “slightly faster than 7%” to “faster than 6%.” This slower expected growth in overall bookings is expected to shape the short-term investment narrative.
However, Booking Holdings continues to capture a larger share of the overall travel market, and the company remains committed to expanding margins and delivering strong double-digit EPS growth.
JPMorgan Chase affirmed its preference for Booking Holdings as the number one choice in the online travel sector, citing the company’s cost management, efficient execution and aggressive capital returns, all supported by strong margins and free cash flow generation.
The new $3,860 price target, set for December 2025, is based on approximately 17 times estimated 2026 GAAP earnings per share, which corresponds to approximately 13 times estimated 2026 adjusted EBITDA.
In other recent news, Booking Holdings has seen a series of financial revisions and adjustments from several analysts. JPMorgan lowered its price target on the company to $3,860, while Evercore ISI lowered its target to $4,200, with both firms maintaining a positive rating on the stock.
On the other hand, B.Riley raised its target to $4,900, citing strong business fundamentals. Barclays also raised its price target to $4,300, citing the company’s strong performance.
Booking Holdings reported a 7% year-over-year increase in room nights in the second quarter, beating its own expectations. The company’s revenue growth forecast was also raised slightly to “more than 7%.” However, the company expects room night growth to slow in the third quarter, with estimates ranging from 3% to 5%.
Different analyst firms have given mixed views on Booking Holdings’ future prospects. While some, such as Benchmark, have upgraded the company’s stock to Buy, others, such as BTIG, have maintained a Neutral stance. These latest developments are based on the company’s recent earnings report, future guidance, and broader market conditions.
InvestingPro Insights
As JPMorgan revises its price target for Booking Holdings, it is worth noting that the company’s strategic financial management is reflected in recent data. With a market cap of $124.32 billion and a P/E ratio of 26.83, Booking Holdings shows ample scope and valuation that is in line with JPMorgan’s expectations. The company’s gross profit margins remain strong at 84.65%, demonstrating efficiency in its operations over the past twelve months as of Q1 2024. Additionally, the company has been proactive with share buybacks, as noted in an InvestingPro tip, indicating management’s confidence in the company’s value.
Analysts are also bullish, with six analysts revising their earnings upwards for the coming period, indicating growth potential that may not yet be fully reflected in the stock price. The company’s forward PEG ratio of 0.83 suggests the stock may be undervalued relative to its earnings growth prospects. These factors, combined with Booking Holdings’ position as a major player in the hotel, restaurant and entertainment industry, underscore the potential for sustained performance.
For investors looking for a more in-depth analysis, additional tips are available from InvestingPro, which delve into aspects such as Booking Holdings’ debt levels, revenue valuation multiples, and profitability expectations for the year. These insights can be accessed through the InvestingPro platform to inform investment decisions with a broader perspective on the company’s financial health and market position.
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