Need A Reason To Buy Booking Holdings? Deutsche Bank Offers 5

Deutsche Bank named five reasons why its cautious stance on online travel agency Booking Holdings Inc BKNG came to an end Tuesday. 

The Analyst

Deutsche Bank's Lloyd Walmsley upgraded Booking Holdings from Hold to Buy with a price target lifted from $2,150 to $2,370.

The Thesis

Investors should be buyers of Booking Holdings — the parent company of Priceline, OpenTable and other travel and leisure online companies — for five reasons, Walmsley said in the Tuesday upgrade note. They are: 

• Booking's room night growth improved from 11 percent in the first portion of the third quarter to 15.6 percent by the end of the quarter. The momentum was likely sustained in the fourth quarter and could further accelerate in the first quarter.
• Booking's stock is trading at just 18.8 times 2019 estimated EPS and 16.3 times 2020 EPS, which is notably below its five-year next 12-month average of 19.7 times.
• The company stands out against its peers by offering investors a high-quality portfolio of assets and earnings, minimal regulatory concerns and a strong free cash flow profile.
• Expectations for an additional share buyback program to be announced on top of the $6.4-billion remaining authorization. This could create upside to 2020 EPS estimates and help minimize volatility in the current market environment.
• The travel space is out of favor with investors, but the group offers a margin of safety compared to the mega-cap internet space.

Price Action

Booking Holdings shares were up 2.68 percent to $1,910.90 late in Tuesday's trading session. 

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