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On Friday, Citi analysts maintained a positive outlook on Booking Holdings stock (NASDAQ:BKNG), raising the price target to $5,800 from the previous $5,500 while reaffirming a Buy rating. The revision follows Booking Holdings’ impressive performance in the fourth quarter, which saw room nights (RN) and gross bookings (GB) grow by 13% and 18% year-over-year, excluding foreign exchange effects, respectively. With a market capitalization of $166.25 billion, InvestingPro data shows the company trading at premium multiples, suggesting investors’ high growth expectations.
The company’s alternative accommodation (AA) segment also showed robust growth with a 19% increase in room nights year-over-year. Direct bookings to consumer (B2C) now represent over 60% of total room nights booked, indicating a strong direct relationship with consumers. This growth comes amid a relatively healthy broader travel market, but Citi highlights that Booking Holdings’ adjusted EBITDA margin expanded significantly by 320 basis points year-over-year to 33.8%, suggesting accelerated market share gains across most regions. InvestingPro analysis reveals impressive gross profit margins of 85.87% and robust revenue growth of 11.11% in the last twelve months.
Citi’s analysts are particularly encouraged by the company’s advancements in its Generation Artificial Intelligence (GenAI) initiatives, which are aimed at enhancing customer service. Furthermore, Booking Holdings has been successful in expanding its distribution channels and in its marketing efforts on social media, which have led to greater marketing efficiency. The firm also has plans to improve its overall cost structure.
The analysts underscored Booking Holdings as their top pick within the online travel agency (OTA) sector. In addition to the company’s operational successes, Citi also notes the positive impact of Booking Holdings’ newly announced $20 billion share buyback program, which is expected to provide additional support to the stock.
In other recent news, Booking Holdings Inc. reported its fourth-quarter 2024 earnings, surpassing market expectations with an earnings per share (EPS) of $41.55, compared to the forecasted $36.13. The company’s revenue also exceeded projections, reaching $5.47 billion against the expected $5.19 billion. This strong financial performance highlights Booking Holdings’ robust growth, with room nights increasing by 13% and gross bookings up 17% year-over-year. For the full year, gross bookings totaled $166 billion, marking a 10% rise, while revenue increased by 11% to $24 billion. Adjusted EBITDA surged by 17%, and adjusted EPS climbed 23% compared to the previous year.
Analyst firms have been closely watching Booking Holdings, noting the company’s strategic investments in AI and operational efficiencies. These developments have contributed to the company’s ability to consistently exceed market expectations in recent quarters. The firm’s outlook for 2025 includes targets of at least 8% growth in constant currency gross bookings and revenue, alongside a 15% increase in adjusted EPS. Booking Holdings’ CEO, Glenn Fogel, emphasized the impact of AI on the company’s strategy, expressing confidence in AI’s potential to enhance operational efficiency.
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