Booking Holdings Price Target Increased by Analysts After First Quarter Miss

Analysts raise their price targets for Booking Holdings.
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Analysts raised their price targets for Booking Holdings BKNG Friday even as the online travel site missed Wall Street's first-quarter expectations after being "profoundly impacted" by the coronavirus pandemic.

Shares of the Norwalk, Connecticut-based company, which operates such sites Booking.com, Kayak, and Open Table, were falling 1.07% to $1,428.47.

Booking Holdings reported a first-quarter loss of $699 million, or $17.01 a share, compared with net income of $765 million, or $16.85 a share, a year ago. Adjusted earnings came to $3.77 a share, falling short of the FactSet consensus of earnings of $5.61 per share.

Revenue totaled $2.29 billion, down from $2.84 billion a year ago, missing FactSet's call for revenue of $2.22 billion.

"The COVID-19 pandemic has profoundly impacted our company and the entire travel industry," CEO Glenn Fogel said in a statement. "We have taken immediate steps to stabilize the company by reducing costs and bolstering our liquidity position." 

Stephen Ju, an analyst with Credit Suisse, raised his price target for the company to $1,810 from $1,790, telling clients in a research note that room nights were largely in line with his expectations for a -42% year-over-year decline, as March booked room nights were down over 60% or down more than 100% inclusive of cancellations.

Ju, who keeps an outperform rating on the company, said he sees the potential for better-than-expected room nights and booking growth due to the reduction of payment friction, the realization of open ended outbound travel growth opportunity in China, and optionality for better-than-expected free cash flow generation due to a shift to merchant.

Deutsche Bank analyst Lloyd Walmsley raised his price target on Booking Holdings to $1,625 from $1,600, while keeping a buy rating on the shares. Wallmsley said he still sees the company's shares as a "strong recovery play," and he came away from the first quarter earnings call "encouraged at early green shoots." 

The company is seeing stability in newly booked room night trends, Wallmsley said, with stronger recoveries in certain countries including China, Korea, Vietnam and Germany.

Stifel analyst Scott Devitt lowered his price target for the company to $1,450 from $1,550, saying that "the company has adequate liquidity to weather the crisis and will continue to invest in key strategic areas such as payments and Connected Trip to extend its leading position as travel rebounds."

"The road back is likely to be long and uneven," said Devitt, who kept his hold rating on the company.