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Booking Holdings Gets Upgrade to Buy at Jefferies

Booking Holdings is well-positioned to outperform in 2021 and 2022, a Jefferies analyst says.
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Booking Holdings  (BKNG) - Get Booking Holdings Inc. Report was upgraded to buy from hold by Jefferies analysts who said they were getting more positive about the online travel company due to increasing signs of pent-up demand from pandemic-weary consumers.

Shares of the company, from Norwalk, Conn., were down slightly Tuesday to $2,395.

Analyst Brent Thill, who also lifted his share price target to $2,800 from $2,300, said in a research note that he is seeing increasing signs of pent-up demand and "a step-up in consumer interest in travel." 

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He believes the company is well-positioned to outperform in 2021-2022 due to such factors as a diversified revenue stream and strong free cash flow.

"We recognize the elevated level of uncertainty around COVID-19 and the fact that the primary push-back on the name is that 85-90% of bookings and revenue come from outside the U.S.," he said, "and the majority of that from markets where infection numbers are still growing and lockdowns are in place."

However, the analyst said he thinks "those concerns will lift by 2H21 as the rest of the world catches up with the U.S. on vaccination levels and global travel rebounds."

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Travel-related stocks were losing ground Tuesday after the Centers for Disease Control and Prevention and the Food and Drug Administration suspended use of Johnson & Johnson's  (JNJ) - Get Johnson & Johnson Report COVID-19 vaccine due to concerns about blood clotting.

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Cruise ship operators were among those companies tumbling in light of the vaccine suspension. 

The analyst said he believes Booking Holdings is better positioned for the recovery than rival online travel company Expedia  (EXPE) - Get Expedia Group Inc. Report.

Booking Holdings, he said, "has much higher exposure to international markets and slightly better diversification."

"This is important in the context of the COVID pandemic because higher exposure to a single region/country makes an OTA dependent on that region/country's success in vaccine distribution and their handling of the pandemic's impact on the economy," Thill said.

Higher diversification at Booking Holdings, he added "bodes well for the speed of its potential rebound."