Last Update04 Sep 25
Despite persistent bullish sentiment driven by resilient leisure travel demand, accelerating reservation data, and valuation discounts versus peers, recent analyst caution over softer Q3 guidance has resulted in no net change to Booking Holdings' consensus analyst price target, which remains at $6,100.
Analyst Commentary
- Bullish analysts continue to raise price targets based on reduced macro risks, a resilient leisure travel backdrop, and incrementally positive trends in Booking’s Asia exposure.
- Several upgrades cite updated room-night and booking volume data showing positive reservation acceleration since March, driving higher revenue and EBITDA forecasts for FY2025 and onward.
- Long-term management confidence in sustainable bookings and revenue growth (~8%) and mid-teens EPS growth supports upward price revisions, bolstered by Booking's global scale and geographic diversity.
- Recent analyst downgrades reflect cautiousness due to Q3 guidance coming in below consensus for room night growth, revenue, and adjusted EBITDA, signaling near-term headwinds versus initial expectations.
- Bullish analysts highlight that despite the stock reaching all-time highs, Booking’s valuation multiples remain at a discount to large-cap internet peers, offering some relative value upside.
What's in the News
- Ryanair and Booking.com agreed to end a U.S. legal appeal regarding Booking.com's alleged unauthorized screen-scraping of Ryanair fares, following support for Booking.com from three U.S. lobby groups (Irish Independent).
- Dutch consumer groups are preparing a legal claim against Booking.com, alleging the company has inflated hotel prices for years, causing hundreds of millions of euros in harm to Dutch consumers (Reuters).
- No material developments related to mergers or acquisitions directly involve Booking Holdings in recent news.
- The remaining updates focus on financial sector M&A activity and do not pertain to Booking Holdings.
- No additional pertinent Booking Holdings news reported within the provided updates.
Valuation Changes
Summary of Valuation Changes for Booking Holdings
- The Consensus Analyst Price Target remained effectively unchanged, at $6100.
- The Discount Rate for Booking Holdings remained effectively unchanged, at 8.68%.
- The Net Profit Margin for Booking Holdings remained effectively unchanged, at 29.24%.
Key Takeaways
- Incorporating AI and expanding accommodation options could improve customer retention and drive future revenue growth.
- Strategic partnerships and diversification across travel verticals enhance integrated travel experiences and support revenue and earnings growth.
- Geopolitical and economic uncertainties may disrupt consumer travel demand, impacting revenue, with region-specific challenges and rising acquisition costs pressuring margins and profitability.
Catalysts
About Booking Holdings- Provides online and traditional travel and restaurant reservations and related services in the United States, the Netherlands, and internationally.
- Booking Holdings is incorporating AI technology across its platforms to improve operations, streamline traveler experiences, and enhance supplier partnerships, which is expected to drive future revenue growth and margin improvement.
- The company's focus on increasing alternative accommodations and expanding its Genius loyalty program aims to strengthen customer retention and capture a broader market, potentially boosting revenue and net margins.
- Initiatives like the Connected Trip vision and strategic partnerships (e.g., with Uber and AI organizations) are designed to offer enhanced, integrated travel experiences, likely leading to increased customer engagement and higher earnings growth.
- Booking Holdings is seeing strong growth in its other travel verticals such as flights (45% growth) and attractions (92% growth), which provide new revenue streams and opportunities for cross-selling, positively impacting overall revenue and earnings.
- The company’s global diversification and disciplined management of expenses, combined with stable leisure travel demand, position it well to navigate potential macroeconomic uncertainties, supporting both revenue stability and margin expansion.
Booking Holdings Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Booking Holdings's revenue will grow by 9.0% annually over the next 3 years.
- Analysts assume that profit margins will increase from 19.2% today to 29.2% in 3 years time.
- Analysts expect earnings to reach $9.5 billion (and earnings per share of $315.01) by about September 2028, up from $4.8 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $8.3 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.8x on those 2028 earnings, down from 37.5x today. This future PE is greater than the current PE for the US Hospitality industry at 23.9x.
- Analysts expect the number of shares outstanding to decline by 2.08% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.66%, as per the Simply Wall St company report.
Booking Holdings Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Geopolitical and macroeconomic uncertainties create concerns about consumer travel demand, potentially impacting revenue and earnings.
- Moderation in travel trends to the U.S., notably from Canada and Europe, suggests region-specific challenges that could pressure U.S.-focused revenue streams.
- Evidence of U.S. consumers becoming more cautious with spending and shifts towards lower-cost accommodations could squeeze margins and affect profitability.
- Potential shifts in travel patterns due to macroeconomic uncertainty might lead to volatile demand in specific regions, impacting overall revenue predictability.
- Successful experimentation in marketing may result in lower average ROIs, indicating increasing acquisition costs that could pressure marketing efficiency and net margins.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $6100.361 for Booking Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7218.0, and the most bearish reporting a price target of just $5200.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $32.4 billion, earnings will come to $9.5 billion, and it would be trading on a PE ratio of 24.8x, assuming you use a discount rate of 8.7%.
- Given the current share price of $5571.83, the analyst price target of $6100.36 is 8.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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