On Wednesday, Mizuho Securities adjusted its outlook on shares of Airbnb Inc . (NASDAQ:ABNB) by reducing its price target to $175 from the previous $200. The firm continues to recommend the stock with an Outperform rating, despite acknowledging some near-term challenges faced by the company.
Airbnb's recent quarterly report revealed a mixed performance, with booking lead times falling short, particularly in the United States. This has resulted in the company's guidance for room nights and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to be lower than expected by 3% and 9%, respectively.
According to Mizuho, the conservative nature of Airbnb's guidance leaves room for potential catch-up bookings later in the quarter, although it also reflects a degree of increased consumer uncertainty.
Despite these immediate concerns, Mizuho believes Airbnb is structurally well positioned for long-term growth. The firm highlights the company's low market penetration in home accommodations and the opportunities for revenue through advertising monetization. However, with an anticipated moderation in room nights for the fiscal year 2024, Mizuho has revised its fiscal year 2027 EBITDA forecast downward by 7%, from $6.8 billion to $6.4 billion.
The price target adjustment is based on an 18 times multiple of the firm's forecasted FY27 EBITDA, a slight decrease from the previously used 19 times multiple. Following the market's response to the quarterly report, Airbnb's stock is trading at approximately 11 times Mizuho's FY27 EBITDA estimate. This valuation is in line with that of online travel agency Booking Holdings (NASDAQ:BKNG) and is considered attractive compared to gig economy peers, according to Mizuho's analysis.
In other recent news, Airbnb finds itself in the spotlight with mixed reactions from analysts. The company's Q3 revenue forecast, ranging between $3.67 billion and $3.73 billion, falls short of the average analyst estimate of $3.84 billion. This cautious outlook stems from a decline in U.S. demand and a slowdown in the growth of nights booked for the upcoming quarter.
Citi has responded to these developments by reducing its price target for Airbnb to $135 from $167, citing a more cautious Q3 outlook despite Airbnb's Q2 performance outperforming consensus estimates. However, Citi maintains a Buy recommendation, highlighting Airbnb's continued leadership in alternative accommodations and potential for net earnings rebound by Q4 of 2024.
Benchmark, on the other hand, maintains a Buy rating and a price target of $190. The firm acknowledges Airbnb's challenges but expresses confidence in the company's ability to perform well in the expanding market for alternative accommodations.
BTIG holds a Neutral rating on Airbnb shares, acknowledging signs of robust Q2 performance but refraining from adjusting its outlook due to lack of clear indicators of what is driving the observed strength. Similarly, DA Davidson also maintains a Neutral rating, keeping the price target steady at $145, despite Airbnb's impressive Q1 results. The firm cites potential challenges in the upcoming quarter as a reason for the stable outlook.
These developments highlight Airbnb's current financial landscape, with the company navigating through an array of mixed signals and projections.
InvestingPro Insights
As Mizuho Securities revises its price target for Airbnb Inc. (NASDAQ:ABNB), a look at the real-time data from InvestingPro shows additional points investors might consider. Airbnb's market cap stands at a robust $82.83 billion, reflecting investor confidence in the company's market position.
The platform's impressive gross profit margin, which is currently at 82.59% for the last twelve months as of Q2 2024, underscores the efficiency of its business model. Despite concerns over near-term challenges, Airbnb's financial health is highlighted by its ability to hold more cash than debt on its balance sheet, offering a cushion against market volatility.
InvestingPro Tips suggest that Airbnb is trading at a low P/E ratio relative to near-term earnings growth, with a current P/E ratio of 16.83, which may appeal to value-oriented investors. Moreover, four analysts have revised their earnings upwards for the upcoming period, indicating potential optimism about the company's financial trajectory. For those interested in further analysis, there are 12 additional InvestingPro Tips available for Airbnb, which can be found at https://www.investing.com/pro/ABNB.
While the stock has experienced a downturn over the last month, with a one-month price total return of -14.45%, Mizuho's long-term outlook remains positive. The InvestingPro Fair Value estimate of $136.1, slightly below the analyst target of $150, provides a benchmark for investors assessing the stock's potential. With Airbnb's next earnings date approaching on October 30, 2024, market participants will be keenly watching for signs of resilience and growth opportunities.
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