BMO Capital Markets analyst Brian J. Pitz initiated coverage on online travel stocks.
The analyst initiated coverage on Airbnb Inc ABNB at a Market Perform rating and price target of $134.
The analyst expects an unfavorable regulatory environment to be a multi-year process and potentially have a more significant impact on revenues.
Notably, Pitz projects a potential revenue risk of up to $1 billion, with other cities adopting stricter stances on short-term rentals.
The analyst expects overall travel sector volatility to increase, especially between now and February (initial indications for Spring/Summer 2024 bookings).
The analyst estimates revenue of $9.844 billion for FY23, $10.987 billion for FY24, and $12.207 billion for FY25.
Pitz initiated coverage on Booking Holdings Inc BKNG at an Outperform rating and price target of $4,150.
With the Genius Loyalty program and acceleration of alternative accommodations, Connected Trip growth initiatives is expected to position the company well for wallet share gains in 2024+, says the analyst.
The company is projected to benefit the most from the ongoing secular travel tailwind in 2024, with an upside from recovery in Asia, writes the analyst.
The company expects the shift to mobile bookings to place less reliance on advertising spending and pave the way for an FCF boost.
The analyst estimates revenue of $21.236 billion for FY23, $23.228 billion for FY24 and $25.015 billion for FY25.
The analyst initiated coverage on Expedia Group Inc EXPE at an Outperform rating and price target of $181.
Pitz says that Expedia has fully migrated Vrbo to its front-end stack with core Expedia and Hotels.com in Q4 FY23, which should offer more significant optionality for travelers.
The analyst writes that these investments, combined with marketing dollars behind Vrbo, should boost upside relative to the Street forecast for 2024.
Overall, Pitz says Expedia is positioned to benefit from greater customer experience levels given supply variety, integrated tech stack for core Expedia, Hotels.com, and Vrbo, and the launch of One Key in July 2023 to boost loyalty value.
The analyst estimates revenue of $12.7 billion for FY23, $13.4 billion for FY24, and $14.2 billion for FY25.
The analyst initiated coverage on TripAdvisor Inc TRIP at a Market Perform rating and price target of $20.
While the analyst sees TRIP's Hotel Meta Search offering facing competitive pressure from Google, he expects recent product launches to accelerate the full-funnel travel competitive environment.
Given the scale of the company's Viator and TUI experiences, the analyst believes there is a scope for strategic M&A in future.
In particular, the analyst projects the TUI Musement segment to generate revenue of ~$778 million in 2023.
Pitz estimates revenue of $1.8 billion for FY23, $1.9 billion for FY24, and $2.0 billion for FY25.
Price Action: BKNG shares are up 0.49% at $3,479.92, and EXPE are higher 0.73% at $150.78, while ABNB is down 1.06% at $138.60 and TRIP is down 5.2% at $20.25 on the last check Tuesday.
Photo via TripAdvisor
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