Morgan Stanley analyst Brian Nowak highlighted that the 2Q earnings commentary failed to change the importance of the state of the consumer, namely the high-end consumer, on the forward growth for travel.
Now, Nowak expects '23 bookings estimates for Booking Holdings Inc BKNG (Equal Weight, price target $2300) to fall by 6%, up from the prior 3% following a steeper than expected slowing of demand.
The analyst expects booking estimates for Expedia Group, Inc EXPE (Equal Weight, price target $128) to fall by 8%, up from the prior 4%.
Nowak anticipates booking estimates for Airbnb, Inc ABNB (Equal Weight, price target $125) to fall by 8%, up from the prior 3%.
During the Great Financial Crisis, BKNG's bookings dropped 13% and EXPE's by 16%.
Brian continues to watch ad spend, discounting, and market share trends, which present a risk to industry unit economics and could significantly pressure EXPE as BKNG and EXPE both continue to invest in customer acquisition and direct traffic.
He notes that the extent to which these trends continue is more of a risk to EXPE than BKNG, given higher uncertainty about long-term growth/market share, the potential for more considerable incremental margin pressure, and higher terminal value uncertainty.
Price Action: BKNG shares traded higher by 1.05% at $1,993.41 on the last check Tuesday.
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