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On Friday, Evercore ISI adjusted its outlook on shares of Booking Holdings Inc (NASDAQ:BKNG), reducing the price target from $4,500 to $4,200, while maintaining an Outperform rating on the stock. This revision follows the company's release of its second-quarter earnings, which presented a mix of achievements and setbacks.
The firm's analysts cited Booking Holdings' mixed and lower than anticipated earnings per share (EPS) for the second quarter as the primary reason for the price target adjustment. Despite the reduction in the target, the analysts continue to view Booking Holdings as a "reasonably priced, very high-quality growth asset," highlighting the company's ability to sustain premium EPS growth at 15%, generate substantial free cash flow, and its proven record of excellent execution.
Booking Holdings, a leader in online travel reservations, experienced a decline in its stock price by approximately 7% in aftermarket trading. This reaction was attributed to the company's third-quarter guidance, which did not meet the expectations of both Wall Street and ISI. The company pointed to incremental weakness in European travel and lower industry airfares as factors contributing to the less optimistic outlook.
The analysts at Evercore ISI emphasized the company's strong fundamentals, suggesting that Booking Holdings is still positioned for growth despite the short-term challenges reflected in the third-quarter guidance. They noted the company's consistent performance and the strategic management of its resources as indicators of its ongoing potential in the travel industry.
While the immediate market response to Booking Holdings' earnings report and future guidance was negative, the Outperform rating suggests that the analysts believe the company's stock will outperform the average return of the stocks the analysts cover over the next 12 to 18 months. The new price target of $4,200, albeit lower than the previous target, reflects an adjustment based on recent developments while still signaling confidence in the company's long-term prospects.
In other recent news, Booking Holdings Inc. is experiencing a series of financial developments. The company reported a 7% climb in total revenue for the second quarter, reaching $5.86 billion, surpassing the projected $5.77 billion. The adjusted quarterly profit was reported at $41.90 per share, outperforming the average analyst estimate of $38.37 per share. However, Booking Holdings forecasts a slowdown in its room nights growth for the upcoming third quarter, with estimates ranging between 3% to 5%.
On the analyst front, Evercore ISI revised its price target for Booking Holdings from $4,500 to $4,200, maintaining an Outperform rating. B.Riley also raised its price target to $4,900 from the previous $4,400, keeping a Buy rating.
Benchmark upgraded shares of Booking Holdings from Hold to Buy, setting a new price target of $4,700. Barclays raised its price target to $4,300 from the previous $3,800, maintaining an Overweight rating on the stock. BTIG, however, affirmed its Neutral stance on Booking Holdings.
These recent developments highlight the mixed views of analysts regarding Booking Holdings, with some expecting the company to outperform despite current economic concerns, while others maintain a more cautious stance. All these insights are based on the company's recent earnings report and future guidance, as well as the broader market conditions.
InvestingPro Insights
As Booking Holdings Inc (NASDAQ:BKNG) navigates through both achievements and setbacks, the latest data from InvestingPro provides a deeper look into the company's financial health and market position. With a market capitalization of $124.32 billion and robust revenue growth of 21.07% over the last twelve months as of Q1 2024, Booking Holdings demonstrates significant scale and momentum. The company's impressive gross profit margin of 84.65% during the same period underscores its efficiency and pricing power in the competitive online travel industry.
An InvestingPro Tip notes that management has been aggressively buying back shares, which could signal confidence in the company's value and prospects. Additionally, six analysts have revised their earnings upwards for the upcoming period, hinting at potential positive sentiment around the company's future performance. For investors considering the stock, Booking Holdings trades at a P/E ratio of 26.83, which is considered low relative to its near-term earnings growth, suggesting that the stock may be undervalued.
Those interested in a more comprehensive analysis can find additional InvestingPro Tips on Booking Holdings at https://www.investing.com/pro/BKNG, offering insights into the company's financials, market trends, and analyst predictions. With the stock currently trading at 88.41% of its 52-week high and a fair value estimate of $4217.5 by analysts, Booking Holdings remains a prominent player in the Hotels, Restaurants & Leisure industry, poised for profitability this year.
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