Tuesday, an analyst at Mizuho has increased the share price target for Trip.com Group Limited (NASDAQ:TCOM) shares to $65 from the previous $60 while reiterating a Buy rating.
The revision reflects Trip.com's performance which surpassed expectations, attributed to a rebound in travel demand and strategic efficiency gains, particularly in cross-selling efforts.
The analyst's positive outlook is bolstered by the relaxing of two key outbound travel constraints: capacity and visa restrictions. This easing is anticipated to further shift the revenue mix in a way that will enhance the company's profit margins. Additionally, Trip.com's international business segment has reached a break-even point in terms of contribution margin.
As Trip.com's profitability continues to improve, Mizuho has adjusted its forecast for the company's financials. The firm's estimated EBITDA for the fiscal year 2025 has been increased by 3% to RMB 16.8 billion. Moreover, a new estimate for fiscal year 2026 has been introduced, projecting an EBITDA of RMB 18.8 billion.
The updated price target of $65 is based on a 16 times multiple of the new fiscal year 2026 EBITDA forecast, which is a change from the previous valuation that applied an 18 times multiple to the fiscal year 2025 EBITDA estimate.
The analyst maintains that Trip.com remains a top pick within the China Internet sector, underlining the company's strong prospects within the industry.
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