Two banks have raised their target prices on Booking shares. Is it worth buying them now?
Analysts from two investment banks at once improved their forecasts for Booking, a booking service whose shares have underperformed the broad market this year. Truist not only raised its target price, but also changed its recommendation from "neutral" to "buy" for the first time in a year. According to the bank, the company's shares could rise by more than 10% due to long-term growth in tourism in Asia and the stable pace of the global economy. Analysts believe that investors' concerns about the impact of artificial intelligence on the travel business are exaggerated.
Details
Analysts at Truist and Gordon Haskett raised their price targets on shares of hotel and flight booking platform Booking. Truist raised its target price on the stock from $5630 to $5750, implying an 11.7% upside. Gordon Haskett raised its target price from $5310 to $5680, implying a 10.4% upside.
Truist also upgraded the company's rating from "neutral" (equivalent to a "hold" recommendation) to "buy," CNBC reported. The bank began coverage of Booking's stock a year ago with a neutral recommendation.
Why analysts have changed their opinion on Booking stock
According to Truist analyst Gregory Miller, Booking has "several areas for profit growth in the short and long term." His opinion is published by Investing. This is supported by the recent decline in quotes by about 7% over the last month, while the S&P 500 and Nasdaq have risen by 2-3% over the same period.
"Strong long-term growth in tourism in Asia - with air travel expected to increase at a rate of 7-9% per year over the next 20 years in South and Southeast Asian countries - was a key factor in the rating upgrade," Miller wrote.
The share of Booking's business in Asia has risen to about 25% from about 20% before the pandemic, according to analysts' estimates. Miller also noted that global GDP growth forecasts are around 3% in 2025-2027 (1-2 percentage points higher in Asia), emphasizing that GDP dynamics over time are "directly correlated with travel demand."
That said, the Truist analyst believes that investor fears about the impact of artificial intelligence on online travel agencies are overblown, adding that "there is no consensus yet on the long-term implications."
On October 27, Booking securities rose by almost 2%, and since the beginning of the year - by 5.5%. At the same time, the U.S. broad market index S&P 500 added more than 16% over the same period.
What are other analysts saying?
The majority of analysts covering Booking securities - 26 out of 40 - recommend buying them (Buy and Outperform ratings). 14 advise to hold them.
Last week, UBS reiterated a "buy" rating and raised its target price to $6743, estimating the securities' upside potential at nearly 31%.
Additionally, KeyBanc initiated coverage of Booking shares on October 23 with a buy recommendation (Overweight) and a target price of $6450, implying a potential 25.3% upside to the stock.
This article was AI-translated and verified by a human editor
