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On Wednesday, CFRA downgraded Trip.com Group Limited (NASDAQ: TCOM) stock rating from Strong Buy to Hold and lowered the price target to $60 from the previous $80. According to InvestingPro analysis, Trip.com maintains a "GREAT" financial health score of 3.38, despite its stock taking a significant 14% hit over the past week. The revision follows Trip.com’s latest earnings report, which displayed a notable increase in 2024 earnings per ADS (EPADS), surpassing analyst expectations. The company reported a 72% year-over-year growth in EPADS to CNY26.20, with revenue climbing 15% to CNY53.3 billion. This growth was attributed to a 25% increase in accommodation reservations, a 10% rise in transportation ticketing, and a 7% uptick in other business segments. The company’s impressive gross profit margin of 81.25% underscores its operational efficiency, one of several key metrics available in the comprehensive InvestingPro Research Report.
Trip.com’s net margin improved by 10 percentage points year-over-year, driven by enhanced scale efficiency and a rise in other income. The company’s solid financial position is evidenced by its current ratio of 1.51, indicating ample liquidity to meet short-term obligations. CFRA acknowledged the robust recovery of the domestic and global travel industries, Trip.com’s strategic expansion into lower-tier cities in China, an extended range of partnerships, and a strong brand proposition as key factors that will likely bolster revenue growth in 2025.
Despite these positive indicators, CFRA adjusted its outlook to Hold from Strong Buy, anticipating a normalization of earnings momentum over the next 12 months due to expected weaker consumer spending trends. Consequently, CFRA also reduced its 2025 EPADS estimate to CNY25.80 from CNY30.00.
The new price target of $60 is based on a projected price-to-book (P/B) ratio of 1.8 times for 2025, which is supported by an anticipated return on equity (ROE) of 11%. This forecast is compared to the average P/B ratio of 2.3 times and a forward ROE of 18% among Trip.com’s peers. With a PEG ratio of 0.37, the stock appears attractively valued relative to its growth prospects. CFRA also initiated a 2026 EPADS forecast of CNY30.33, setting a foundational expectation for the company’s performance in the following year. Discover more detailed valuation metrics and insights with InvestingPro, which indicates the stock is currently undervalued based on its proprietary Fair Value model.
In other recent news, Trip.com Group Limited has reported significant developments that could interest investors. The company achieved a 23% year-over-year revenue increase in the fourth quarter, driven by strong domestic travel demand and a 70% surge in performance from its website, trip.com. However, the operating profit margin contracted due to increased investments in international market expansion. Analysts from Benchmark maintained a Buy rating with an $80 price target, noting conservative guidance for fiscal year 2025 with anticipated mid-teen revenue growth and a 2-3% margin contraction.
TD Cowen also maintained a Buy rating but adjusted its price target to $67, citing Trip.com’s revenue growth exceeding expectations. Barclays (LON:BARC) reaffirmed an Overweight rating with an $84 target, highlighting robust outbound travel growth and increased international bookings. Mizuho (NYSE:MFG) continued its Outperform rating with a $78 target, pointing to strong operational leverage and a positive financial outlook. Bernstein adjusted its price target to $80, maintaining an Outperform rating, while noting softer recent travel data but expecting improved demand growth later in the year. These developments reflect Trip.com’s strategic focus on expanding its international presence and capturing market share, despite short-term margin pressures.
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