Booking Holdings Inc. (NASDAQ: BKNG) is a well-known name in the travel and leisure industry. It operates through an online platform that allows its customers to make travel and restaurant-related reservations. The $90.2 billion company is headquartered in Norwalk, CT.
Shares of Booking Holdings have increased 17.2% over the past five years. Although the company’s stock has slipped 4.9% in the past year, mainly to due the Ukraine-Russia war, it will be interesting to understand why analysts on TipRanks are presently optimistic about the company.
The travel and leisure industry player has a Strong Buy consensus rating on TipRanks based on 17 Buys and five Holds. BKNG’s average price target of $2,814.95 suggests 26.71% upside potential from current levels.
Now, let’s discuss why BKNG stock is being cherished so much.
Healthy Industry Dynamics
After being severely impacted by the pandemic, the travel and leisure industry is back on the recovery path. Demand for leisure and business-related traveling is growing on both domestic and international fronts.
Service providers like Booking Holdings are seen leveraging this favorable scenario. Also, the increasing use of online platforms in the industry has proven to be advantageous. The industry’s revenues are forecast to grow 39.4% year-over-year to $128.4 billion in 2022, according to Statista.
Sound Performance and Projections
Booking Holdings’ performance in the first quarter of 2022 was impressive. Its earnings of $3.90 per share came in above the consensus estimate of $0.85 per share. Also, revenues of $2.7 billion exceeded the consensus estimate by 6.6%. On a year-over-year basis, revenues grew 136% year-over-year, driven by a 129% rise in gross travel bookings.
Earlier in May, the company’s CEO, Glenn Fogel, said that the company enjoyed healthy travel bookings so far in the second quarter. He added that the company was “preparing for a busy summer travel season ahead.”
“I’m encouraged by how well our teams are executing to capture travel demand in this recovery environment and our progress in expanding our payments platform at Booking.com while we build towards our Connected Trip vision,” Fogel said.
For the second quarter of 2022, the consensus estimate for Booking Holdings’ earnings stands at $17.97 per share.
Booking Holdings is poised to gain from growth in room night trends, global flights product, and higher accommodation daily rate (average). Also, improvements in businesses in Asia and Europe, and other countries will be advantageous. Minor setbacks related to the ongoing Ukraine-Russia war can be easily dealt with.
Further, the company’s business has seen a surge due to the adoption of online platforms by customers. In the first quarter, nearly 40% of room nights booked were done using the company’s app.
The company is also working on enhancing its product offerings, including alternative accommodation products for travelers, providing better payment solutions, and effective marketing campaigns.
A few days ago, Deepak Mathivanan of Wolfe Research reiterated a Buy rating on BKNG while lowering the price target to $2,600 (17.04% upside potential) from $3,300.
Another analyst, Thomas Champion of Piper Sandler maintained a Hold rating on Booking Holdings while increasing the price target to $2,500 (12.54% upside potential) from $2,440.
According to TipRanks, while financial bloggers are 100% Bullish on BKNG, retail investors have a Very Positive sentiment.
Further, the TipRanks’ Website Traffic tool shows that the footfall on the company’s websites has increased 40.74% quarter-to-date and 15.90% year-to-date on a year-over-year basis. The growth rate in April stood at 40.74%.
Resumption in trade activities worldwide and improving economic growth, following the havoc created by the pandemic, have fueled demand for business travel. Also, people opting for leisure traveling have proved to be top-line drivers for Booking Holdings. Further, the recent dip in the stock price can be used by investors to gain exposure to BKNG stock.
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