Booking Holdings Stock Up 30% Over Last Six Months. What’s Next?
After a 30% growth over the last six months, at the current price of around $2671 per share, we believe Booking Holdings (NASDAQ: BKNG), the world’s largest online travel agency that offers services from lodging to airline tickets to car rentals – is fairly priced in the near term. BKNG stock has increased from around $2042 to $2671 in the last six months, outperforming the broader indices, with the S&P growing about 8% over the same period. Booking Holdings has fully recovered from the difficult period caused by the pandemic in terms of revenues. However, its operating income of $450 million in Q1 2023 is still below pre-pandemic values ($556 million in 2019), although it improved compared to Q1 2022. In Q1 2023, the Board of Directors authorized a share repurchase program of about $20 billion which shows that there is the potential to increase EPS in the coming quarters.
The online travel agency’s revenues grew 40% year-over-year (y-o-y) to $3.8 billion, driven by a 44% y-o-y increase in gross bookings to $39 billion. Room nights booked increased 38% from the prior-year quarter, rental car days were up 23% y-o-y, and airline tickets booked jumped 73% y-o-y in Q1. Further, BKNG’s adjusted EBITDA was up 89% y-o-y to $586 million but came in below the consensus estimate of $627 million. Also, its earnings per share came in at $7.00 compared to a loss of $17.10 in Q1 2022. Last year in 2022, Q1 was severely impacted by the Omicron Covid-19 variant and Q2 2022 saw a strong rebound from Omicron-impacted Q1 2022.
Going forward, BKNG expects Q2 2023 room night growth to be up mid-single digits y-o-y. In addition, BKNG’s fixed expenses in Q2 will grow about 25% y-o-y due to higher personnel and related expenses, indirect taxes, and IT expense. For the full-year 2023, the company expects its adjusted EBITDA margin to expand by a couple of percentage points versus 2022.
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We forecast Booking Holdings’ revenues to be $20.6 billion for the fiscal year 2023, up 21% y-o-y. Looking at the bottom line, we now forecast EPS at $138.17. Given the changes to our revenues and earnings forecast, we have revised our Booking Holdings’ Valuation to about $2722 per share, based on $138.17 expected EPS and a 19.7x P/E multiple for the fiscal year 2023 – almost in line with the current market price.
It is also helpful to see how its peers stack up. Check out how Booking Holdings’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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| Returns | Jun 2023 MTD [1] |
2023 YTD [1] |
2017-23 Total [2] |
| BKNG Return | 6% | 33% | 82% |
| S&P 500 Return | 2% | 11% | 91% |
| Trefis Multi-Strategy Portfolio | 3% | 13% | 255% |
[1] Month-to-date and year-to-date as of 6/6/2023
[2] Cumulative total returns since the end of 2016
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