Booking Holdings Inc.

(NASDAQ Global Select)
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Slightly Bullish +25

Booking Holdings Is Down 27% This Year. Four of Five Recent Analyst Calls Still Say Buy

AI agents Analyst downgrade Company update AI-generated analysis

πŸ“‰ BKNG shares are down 27% year-to-date as the market prices in a lower forward P/E multiple near its five-year low.

πŸ“ˆ Q3 earnings beat guidance with room nights up 7% and adjusted EPS rising 17%, though revenue slipped 1% due to non-GAAP adjustments.

⚠️ Fourth-quarter guidance was lowered to 1%-3% growth in room nights due to cooling international demand and geopolitical disruptions.

πŸ€– AI booking agents pose a strategic risk, with Morgan Stanley data showing they direct 97% of users to official hotel sites rather than OTAs.

🏠 Airbnb continues to gain market share in vacation rentals, growing nights booked by 10% compared to Booking's 4% growth in alternative accommodations.

βš–οΈ The company faces a $900 million revenue reduction related to an FTC matter involving Priceline, excluding it from adjusted figures.

πŸ“Š Analysts maintain Buy ratings despite target cuts, with most price targets implying a multiple expansion back to historical averages.

πŸ” Direct booking share remains stable in the mid-50s%, mitigating immediate concerns about traffic diversion to AI agents or competitors.

Bullish Signals
  • Booking Holdings beat Q3 guidance with room nights growing 7% against a forecast of 3%-5%.
  • Adjusted EPS jumped 17% in the third quarter, demonstrating strong underlying profitability despite revenue headwinds.
  • Gross bookings grew by double digits in Q3, indicating robust demand for the company's core travel services.
  • The stock trades at a forward P/E of 14x, significantly below its five-year average of 21x, suggesting potential undervaluation.
  • Analysts maintain Buy ratings with price targets ranging from $220 to $265, implying significant upside from current levels.
Risk Factors
  • Fourth-quarter guidance was cut to just 1%-3% growth in room nights due to softening travel demand and geopolitical instability.
  • The company faces a $900 million revenue reduction tied to an FTC matter involving Priceline, creating regulatory uncertainty.
  • AI booking agents are disrupting the industry by directing 97% of users to official hotel websites instead of online travel agencies.
  • Airbnb is gaining market share in vacation rentals, growing nights booked by 10% while Booking's alternative accommodation growth slowed to 4%.
Full Analysis
Booking Holdings (BKNG) shares have declined 27% year-to-date, driven primarily by a compression in valuation multiples rather than deteriorating earnings performance. Despite the stock trading near its lowest forward P/E in five years at 14x, four of five major analysts recently maintained Buy ratings ahead of the third-quarter report, though they trimmed price targets to reflect a more cautious outlook. The company reported strong third-quarter results that beat guidance, with room nights growing 7% and adjusted EPS jumping 17%. However, management issued softer fourth-quarter guidance citing cooling travel demand, specifically noting disruptions in the Middle East and unrest in European cities. Consequently, the company lowered its Q4 outlook to just 1%-3% growth in room nights and flat adjusted EBITDA. Investors are closely monitoring two primary risks: the rise of AI booking agents that could divert traffic from online travel agencies, and competitive pressure from Airbnb in the vacation rental sector. While AI traffic remains below 1% of total room nights and direct bookings hold steady at mid-50s%, analysts worry about long-term channel shifts. Additionally, Booking faces a $900 million revenue reduction tied to an FTC matter involving Priceline, which was excluded from adjusted figures but highlights regulatory headwinds. Analysts believe the stock's multiple is likely undervalued relative to its earnings growth potential, with most price targets implying a return to historical average valuations. The consensus expects normalized EPS to grow from $9.12 in fiscal 2025 to $14.46 by fiscal 2028. The upcoming test for the stock will be whether fourth-quarter results and subsequent estimates hold firm against the backdrop of macroeconomic softness.