Booking Holdings Inc (NASDAQ:BKNG) is tipped for more upside after its quarterly earnings impressed, with stockbroker Wedbush raising its target price.
“We continue to view Booking as our top pick within online travel and believe the company is best positioned for the current demand environment given its international mix and accommodation mix,” Wedbush analyst Scott Devitt said in a note.
“Looking beyond the current demand cycle, we see opportunities for longer term growth and margin expansion stemming from the company's connected trip strategy (payments & flights), rising mix of direct bookings (48% of room nights in 3Q), and continued growth in alternative accommodations (particularly in the U.S.).”
With a new target price of US$3,450 the stockbroker’s ‘buy’ rating sees just over 15% of further upside to Booking’s current price of around US$3,000.
Booking stock is up around 6% on Friday changing hands at US$3,022 after the travel booking group last night reported expectation-beating results.
Wedbush Devitt added: “Booking continues to benefit from its broad geographic exposure as international growth outperformed the U.S. in the quarter with notable strength in APAC.
“Strength continued in July with global hotel room nights sold trending up +20% Y/Y, solidly ahead of our +11.5% Y/Y estimate for the quarter heading into results and consensus of +10.5% Y/Y. Management also raised its full year bookings growth outlook to slightly over +20% Y/Y, above the Street's +19% estimate.”
Better second quarter
Revenue for the quarter ended June 30 reached $5.5 billion, a substantial 27% jump year-over-year and topping expectations of $5.17 billion. Earnings were $34.89 per share, an increase of 66% from last year, and well above estimates of $29.16.
Gross travel bookings rose to $39.7 billion, a 15% upturn compared to the same period last year, underlining the resilient travel demand. Room nights booked, a crucial metric reflecting occupancy rates, was 9% higher than the year-ago quarter.
"In the second quarter, we continued to see robust leisure travel demand, which helped drive stronger than expected room nights and gross bookings results in the quarter,” CEO Glenn Fogel said in a statement. “We have seen these strong trends continue into July, and we are currently preparing for what we expect to be a record summer travel season in the third quarter."
Fogel also discussed the recent introduction of AI-enabled travel assistants at Priceline and Booking.com, a move the company expects will elevate the customer experience.