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On Friday, Benchmark analyst Daniel Kurnos increased the price target on Booking Holdings (NASDAQ:BKNG) to $5,900 from the previous $5,000, while maintaining a "Buy" rating on the stock. Currently trading at $5,018 with a market capitalization of $166 billion, InvestingPro analysis indicates the stock is trading above its Fair Value. The adjustment follows Booking Holdings’ first-quarter room-night guidance, which met the high-end of market expectations despite various timing and currency challenges. Kurnos noted that if normalized, the guidance would indicate low-double-digit growth across all significant metrics, aligning with the company’s current revenue growth of 11.1%.
The company’s margin guidance for the year was also a point of focus. Kurnos had previously indicated that the consensus margin outlook was already positive, with InvestingPro data showing an impressive gross profit margin of 85.9%, but Booking Holdings’ plans to reinvest in future growth during their transformation process might lead to a margin expansion slightly below expectations. The forecasted EBITDA margin expansion is less than 100 basis points year-over-year, compared to the previously flagged consensus expectation of a 120 basis point increase.
Kurnos referenced statements from Booking Holdings’ former CFO David Goulden during the fourth-quarter 2023 earnings call, where Goulden predicted an adjusted EBITDA margin expansion of just under one percent for 2024. This projection aligns with the company’s actual performance last year, which saw a 170 basis point increase. Kurnos suggests that the current consensus may not require significant adjustments for 2025 or 2026, potentially positioning Booking Holdings for further upside as the year unfolds.
Booking Holdings’ strategic focus on reinvestment for growth is part of a broader transformation process aimed at strengthening the company’s market position. Despite the margin guidance for the year signaling a more conservative expansion than anticipated, the company’s track record suggests the potential for outperformance.
The raised price target and maintained "Buy" rating reflect Benchmark’s confidence in Booking Holdings’ ability to navigate the current market environment and capitalize on growth opportunities. With an overall financial health score of "GREAT" according to InvestingPro, which offers 12 additional exclusive ProTips and a comprehensive Pro Research Report for this prominent player in the Hotels, Restaurants & Leisure industry, investors will watch closely as the company progresses through its transformation and strives to meet or exceed market expectations.
In other recent news, Booking Holdings has reported strong fourth-quarter earnings for 2024, surpassing expectations and demonstrating significant growth in key areas such as room nights and gross bookings. Analysts have responded by adjusting their price targets for the company. BMO Capital Markets increased its target to $5,900, citing the company’s outperformance in growth metrics compared to its peers. Piper Sandler raised its target to $5,120 while maintaining a Neutral rating, noting the company’s steady earnings pattern and future guidance. Evercore ISI also adjusted its target to $5,500, highlighting the company’s robust performance across various travel sectors.
Goldman Sachs set a new price target of $5,020, emphasizing Booking Holdings’ operational efficiency and strategic focus on artificial intelligence to enhance customer conversion. JPMorgan raised its target to $5,750, maintaining an Overweight rating and expressing confidence in the company’s ability to sustain healthy travel demand into 2025. Analysts have noted the company’s strategic initiatives, including alternative accommodations and AI advancements, as key drivers for future growth. Overall, Booking Holdings’ recent developments reflect its strong market position and potential for continued expansion.
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