The downgrade was due to what Telsey sees as a weaker economic outlook and the growing threat from Alphabet's Google (GOOGL) - Get Report and Airbnb, which recently purchased Hotel Tonight and placed itself in even more direct competition with Booking Holdings.
The firm also lowered its price target to $1,800, which represents a 2.5% upside from the stock's previous closing price.
"We are lowering our PT to $1,800 and downgrading the stock to MP due to: (1) a weaker European economic outlook; and (2) growing threats from Airbnb and Google, which are now encroaching on BKNG's core hotel offering... While BKNG's valuation is not overly stretched, we believe these incremental challeges warrant a move to the sidelines," the note said.
Despite these headwinds, there are positives still apparent in the company's fundamentals, according to Telsey.
"While BKNG's valuation is not overly stretched (considering its B/S, low capital spending, and exposure to independents), we believe these incremental challenges warrant a move to the sidelines," warned the Telsey analyst team.
Alphabet is a holding in Jim Cramer's Action Alerts PLUS charitable trust.
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