Upcoming third quarter earnings reports from major online travel companies Airbnb Inc (NASDAQ:ABNB, ETR:6Z1), Booking Holdings Inc (NASDAQ:BKNG, ETR:PCE1), and Expedia Group Inc (NASDAQ:EXPE, ETR:E3X1) will underscore a growing divergence in performance between the US and international markets, according to Wedbush analysts.
In a note to clients, the firm wrote that the overall backdrop for the sector has been mixed, with investors turning more cautious on global travel demand amid modest data and softer commentary compared with estimates.
While global trends have slowed, Wedbush said it views the US travel market “more constructively,” with elevated expectations for companies that have greater domestic exposure.
Across the industry, the analysts said near-term visibility remains limited due to “tighter booking windows and lingering macro uncertainty.”
They added that management teams have pointed to evolving travel patterns and that upcoming results will be closely watched for “any major shifts in consumer behavior or sentiment.”
Airbnb
Wedbush maintained a ‘Neutral’ rating and $130 price target on Airbnb, noting that the company faces a softer demand backdrop compared with peers.
The firm said that among the online travel names it tracks, “the alternative lodging data we track has been the softest,” leading to a more cautious outlook for Airbnb’s results.
They see investor focus this quarter centering on “the ongoing rollout of experiences/services product and mix to higher-growth expansion markets beyond the core,” as well as management’s ability to manage “softening demand trends in core markets” and the near-term margin impact of new growth investments.
“Sentiment has been muted following a mixed 3Q forecast,” the analysts wrote.
Shares of Airbnb are up about 7% since last quarter, trading hands at $127 on Wednesday afternoon.
Wedbush said Airbnb’s historical valuation premium “may be hard to retain in a softer operating environment” but described the current “risk/reward as more balanced versus prior periods.”
Booking Holdings
For Booking Holdings, Wedbush reiterated its ‘Neutral’ rating and $5,900 price target, saying that sentiment for the stock “has eased since the company reported Q2 results.”
Shares are down about 5% at $5,232 compared to the S&P 500’s gain of 6% over the same period
The analysts see Booking as “the best-positioned OTA in our view,” citing its “global scale and diversification, strong liquidity and free cash flow conversion, and track record of successful execution across key strategic initiatives.”
However, they remain cautious on the broader online travel sector given that “tighter booking windows” continue to limit visibility into the remainder of the year.
Expedia
Expedia has seen stronger investor sentiment heading into earnings, Wedbush highlighted.
The company’s shares have gained about 16% since the second quarter and 22% in the year to date to trade at $225.
Wedbush said it sees near-term upside to estimates but remains neutral as it waits for “more evidence of sustained improvements in demand trends” for Vrbo and Hotels.com.
They noted that Vrbo’s room nights grew only in line with the US market last quarter.
The analysts raised their near-term estimates and increased their price target to $230 from $220, while maintaining a ‘Neutral’ rating on Expedia.