On Tuesday, Argus increased the price target for Booking Holdings (NASDAQ:BKNG), a leader in the online travel industry, setting it at $4,342.00, up from the previous $4,200.00, while reiterating a Buy rating on the stock.
The firm's analyst cites a positive outlook on online travel companies, especially Booking Holdings, due to its strong presence in Europe where it earns the majority of its gross profit. The anticipation of a surge in online bookings for flights, hotel stays, and vacation rentals is expected to drive the company's financial results.
The revised target price reflects several key factors, including the economic reopening in China, sustained robust demand for travel, and Booking Holdings' track record of exceeding earnings expectations. In light of these developments, the analyst has adjusted the earnings per share (EPS) forecast for the company, increasing the 2024 EPS estimate to $183 from $182 and the 2025 EPS projection to $212 from $210.
The new price target suggests a potential upside of about 16% from the stock's current trading levels. This is further bolstered by the initiation of a dividend, which adds an additional element of return for shareholders. The firm's assessment underlines the strength and resilience of Booking Holdings in the competitive travel industry.
In other recent news, Booking Holdings reported a robust first quarter for 2024, marked by significant growth in both room nights booked and financial metrics. The company saw a year-over-year increase of 9% in room nights, with nearly 300 million booked. Additionally, revenue for the quarter reached $4.4 billion, a 17% increase from the previous year, while adjusted EBITDA rose by 53%, reaching approximately $900 million. The company's adjusted earnings per share also saw substantial growth, increasing by 76% year-over-year.
Despite these strong results, Booking Holdings expects a slowdown in room night growth for the second quarter, attributing this to geopolitical issues in the Middle East. The company estimates a growth rate of 4-6% for room nights in the upcoming quarter. Additionally, the company's projections for the second quarter include bookings growth of 3-5%, revenue growth of 4-6%, and adjusted EBITDA between $1.7 billion and $1.75 billion.
These recent developments indicate a strong start to 2024 for Booking Holdings, with the company capitalizing on increased travel demand, particularly in Europe. However, geopolitical challenges are expected to moderate growth in the coming quarter. Despite this, Booking Holdings' strategic investments and focus on long-term growth suggest a commitment to maintaining its position as a leading travel platform.
InvestingPro Insights
Following the recent price target update for Booking Holdings (NASDAQ:BKNG), InvestingPro data shows a robust financial landscape for the company. With a market capitalization of $127.69 billion, Booking Holdings is a heavyweight in the online travel market. Its impressive gross profit margin of 84.65% over the last twelve months as of Q1 2024 underlines the firm's operational efficiency and is a testament to its strong position in the industry, which is also reflected in its significant revenue growth of 21.07% during the same period.
InvestingPro Tips highlight that management's aggressive share buybacks and the company's low price volatility make it a potentially stable investment. Moreover, the company's P/E ratio, standing at 26.07 on an adjusted LTM basis, indicates it may be trading at a discount relative to its near-term earnings growth, with a PEG ratio of just 0.85 suggesting potential for future value growth. For those looking to explore further, there are 11 additional InvestingPro Tips available, which can provide deeper insights into Booking Holdings' performance and outlook.
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