On Thursday, Barclays (LON:BARC) adjusted its outlook on Booking Holdings (NASDAQ:BKNG), raising the price target to $4,300 from the previous $3,800 while maintaining an Overweight rating on the stock. The firm's analyst cited the company's robust performance following its first-quarter results, noting a 16% increase in its share price, which outpaced the NASDAQ's 13% gain during the same period.
Booking Holdings has been trading around its all-time high levels, a trend that Barclays believes reflects market optimism for the online travel company's second quarter and full-year 2024 guidance. The expectation is that the upcoming financial results could surpass current projections. Despite this potential, the analyst suggests that the positive outlook may already be reflected in the current stock price, which is trading at approximately 20 times the 2025 consensus GAAP earnings per share.
Barclays has increased its estimates for room nights slightly, anticipating a better conversion into bookings. This adjustment assumes that sectors such as air travel and cruise/rental car services will continue to perform well. While the revisions are positive, Barclays remains cautious about the travel industry overall. Concerns are noted regarding the US consumer's spending behavior, which appears to be retracting, and a decline in web traffic on key online travel agency sites.
In other recent news, Booking Holdings has been the subject of significant financial developments. The company reported a notable first quarter 2024 growth, with a 9% year-over-year increase in room nights, totaling nearly 300 million. Revenue rose by 17% to reach $4.4 billion, and adjusted EBITDA increased by 53% to approximately $900 million. Despite these strong results, Booking Holdings anticipates a slowdown in room night growth for the second quarter due to geopolitical issues.
Analysts from BTIG, Erste Group, and Argus have provided insights into Booking Holdings' performance. BTIG maintained a neutral stance, predicting a room night growth of approximately 7% for the second quarter. Erste Group upgraded Booking Holdings to a buy rating, citing the company's high operating margin and strong global presence. Argus raised its price target for Booking Holdings to $4,342, reflecting a positive outlook on online travel companies and the company's strong presence in Europe. These are recent developments that investors should be aware of.
InvestingPro Insights
With Booking Holdings (NASDAQ:BKNG) reaching new heights, the latest insights from InvestingPro shed light on key financial metrics and strategic moves by the company. The impressive 84.65% gross profit margin over the last twelve months as of Q1 2024 underscores the company's efficiency in maintaining profitability amidst industry challenges. Additionally, management's aggressive share buyback strategy is a strong signal of confidence in the company's future, aligning with the recent positive outlook from Barclays.
The stock's low price volatility also suggests a stable investment, particularly appealing for those looking to enter the online travel market with less risk. Moreover, Booking Holdings' position as a prominent player in the Hotels, Restaurants & Leisure industry is further solidified by its moderate level of debt and substantial market capitalization, which stands at $134.02 billion. Notably, the company is trading at a low P/E ratio relative to near-term earnings growth, presenting an attractive valuation for investors considering the stock's potential.
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