Booking Holdings Inc (Nasdaq: BKNG) stock has gained 21 percent so far in 2018 on investor enthusiasm for a surge in the online travel market. Unfortunately for BKNG stock, analysts say Booking may be missing out on the best-performing segments of online travel.
According to Benchmark analyst Daniel Kurnos, there’s no question Booking, formerly known as Priceline, is the global market share leader in the high-growth business of online travel. However, Booking’s dominant market share in traditional hotels doesn’t necessarily mean the company is well-positioned to capture future growth.
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“Packages, activities and alternative lodging have even more rapidly become the incremental growth engine in the space, and in those areas, we find Booking Holdings continuing to play catch-up in an increasingly competitive environment,” Kurnos says.
Kurnos says deceleration in booking growth could persist for Booking Holdings, and the stock’s premium valuation could be at risk.
Kurson says there is up to 10 percent upside for both Booking consensus earnings estimates and BKNG stock share price. Benchmark is forecasting second-quarter earnings per share of $18.37, well above consensus estimates of $17.32.
“From a fundamental perspective, our revised forecast falls slightly ahead of consensus for 2018 and about 5 percent higher than consensus in 2019,” Kurson says.
Kurson says BKNG stock downside is limited at this point and the risk-reward profile is balanced for the stock.
CFRA analyst Tuna Amobi says international market share gains and double-digit revenue growth in 2019 is already priced into BKNG stock. While Booking may have fallen behind competitors in atlernative accomidations, Amobi says its not too late to be a growth engine for the company.
“We see potentially significant upside on further market share gains in the nascent global alternative accommodations market, with those listings now fully integrated into Booking.com,” Amobi says.
He says 2018 will be a transitional year for Booking, but near-term investments will help support mid-to-high teens return on capital in the longer term.
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Amobi says near-term guidance is also conservative.
“BKNG sees its Q2 revenues up 12 to 16 percent, with gross bookings up 10 to 14 percent and room nights up 7 to 11 percent, a somewhat cautious outlook for the onset of the crucial summer travel season,” he says.
Benchmark has a “hold” rating for Booking Holdings. CFRA has a “hold” rating and $2,200 price target for BKNG stock.
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Booking Holdings Inc (BKNG) Is Missing Out On Key Growth Areas originally appeared on usnews.com
