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On Friday, JPMorgan analyst Doug Anmuth increased the price target on Booking Holdings (NASDAQ:BKNG) to $5,750 from $5,575, while maintaining an Overweight stock rating. Currently trading at $5,018, with a market capitalization of $166 billion, the stock appears overvalued according to InvestingPro analysis. This adjustment follows Booking Holdings’ reported fourth-quarter earnings, which surpassed expectations set by strong performances from competitors Expedia Group (NASDAQ:EXPE) and Airbnb (ABNB).
Booking Holdings achieved a robust fourth quarter, marked by significant growth in room nights (RNs) and gross bookings (GBs). With impressive gross profit margins of 86% and revenue growth of 11%, the company demonstrated strong operational efficiency. The company’s management noted an acceleration in bookings throughout the quarter and an expansion in the booking window. The positive trend is expected to continue, with management expressing confidence in sustained healthy travel demand into 2025. InvestingPro data reveals 12 additional key insights about BKNG’s performance and outlook.
The company’s guidance for the first quarter suggests high single-digit percentage growth at the upper end, even after adjusting for factors such as the Leap Year, Easter timing, and foreign exchange impacts. Booking Holdings has also outlined long-term ambitions, including over 8% foreign exchange neutral (FXN) growth in GBs and revenue, and over 15% FXN growth in earnings per share (EPS) by 2025.
The company’s outlook for 2025 anticipates GBs and revenue at the upper end of Expedia’s guidance of 6% to 8% FXN growth. With current EBITDA of $8.2 billion and a strong financial health score rated as "GREAT" by InvestingPro, the company maintains a moderate debt level and healthy current ratio of 1.31. Additionally, Booking Holdings expects to achieve a modest expansion in adjusted EBITDA margins, bolstered by $150 million in savings from its Transformation Program and further operational efficiencies.
Anmuth pointed out that Booking Holdings is well-positioned to partner with and benefit from generative AI advancements, including collaborations with industry leaders such as OpenAI. This could potentially reduce customer acquisition costs over time. The company’s strategic initiatives, including alternative accommodations, the Connected Trip strategy, direct and loyalty bookings, generative AI, and regional expansion, are anticipated to drive double-digit EPS growth in the coming years.
The updated price target of $5,750 is based on approximately 25 times JPMorgan’s estimated 2026 GAAP EPS for Booking Holdings. The Overweight rating reflects the firm’s positive outlook on the company’s ability to execute on its strategic initiatives and deliver strong capital returns.
In other recent news, Booking Holdings reported impressive fourth-quarter 2024 earnings, significantly surpassing market expectations. The company achieved an earnings per share (EPS) of $41.55, outperforming the projected $36.13, and revenue reached $5.47 billion, exceeding the forecast of $5.19 billion. This strong financial performance was highlighted by a 13% growth in room nights and a 17% increase in gross bookings year-over-year. Citi analysts responded to these results by raising the company’s stock price target to $5,800 and reaffirming a Buy rating, citing Booking Holdings as their top pick in the online travel agency sector.
The company’s alternative accommodation segment also showed robust growth with a 19% increase in room nights year-over-year. Booking Holdings has been advancing its AI initiatives, which are expected to enhance customer service and operational efficiency. The company also announced a $20 billion share buyback program, which analysts believe will provide additional support to the stock. For 2025, Booking Holdings aims for at least 8% growth in gross bookings and revenue, with a 15% increase in adjusted EPS.
CEO Glenn Fogel emphasized the company’s commitment to leveraging AI technology to enhance its offerings and operational efficiency. The company’s efforts in expanding its distribution channels and marketing efficiency have been noted as contributing factors to its strong performance. Booking Holdings’ strategic initiatives and strong quarterly results have positioned the company well for future growth, as reflected in the positive response from analysts and investors.
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