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Airbnb Gets Plaudits, Caution on Valuation From Analysts

A number of analysts initiated coverage of Airbnb, expressing enthusiasm about the home-sharing company amid concern about the share price.
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Airbnb  (ABNB) - Get Airbnb Inc. Report received coverage initiations from a number of analysts on Monday, and they generally expressed enthusiasm for the home-booking company but not for its valuation.

Airbnb recently traded at $146.06, down 0.5%. The stock has firmed 1% since its first day of trading Dec. 10.

Goldman Sachs analyst Heath Terry has a neutral rating and a $143 price target on the San Francisco company.

“With management having significantly reduced costs in the early days of the pandemic, aligning the cost structure around the core alternative-accommodations business, the economics of the model at scale are among the most favorable that we see in the online travel space,” he wrote in a commentary.

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“That said, at about 17 times 2022 Goldman Sachs's estimated sales, with a three-year compound annualized growth rate of 33%, versus comparisons at 5 times on 27% growth, ... much of this outlook is priced into shares of ABNB already and will look for better entry points.”

Morgan Stanley analyst Brian Nowak rates Airbnb equal weight, with a $140 price target. 

He respects the company’s “verb status within alternative accommodations,” he wrote in a commentary. Airbnb enjoys an $810 billion total addressable market, which is growing, Nowak said.

“We like ABNB’s growth runway, as its $38 billion of 2019 gross bookings represents only 5% of the $810 billion,” the analyst wrote.

Further, “we expect brand leadership to drive scalable growth, even through investment (14% 2019-24 CAGR revenue, 18% 2024 Ebitda margin),” Nowak said. “But a 16 times revenue multiple seems full. … [We] await - entry point.”