Booking Holdings Issues Soft Guidance Despite Strong Q1 Upside; These Analysts Delve Deeper

Shares of Booking Holdings Inc BKNG, the parent company of Booking.com, were climbing in early trading on Friday, along with other big stocks reporting earnings for the quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• JPMorgan analyst Doug Anmuth Huang maintained an Overweight rating, while raising the price target from $3,950 to $4,025.
• BMO Capital Markets analyst Brian Pitz reaffirmed an Outperform rating, while lifting the price target from $4,150 to $4,205.
• DA Davidson analyst Tom White reiterated a Buy rating, while raising the price target from $4,100 to $4,150.
• Mizuho Securities analyst James Lee maintained a Buy rating and price target of $4,250.
• Oppenheimer analyst Jed Kelly reaffirmed an Outperform rating and price target of $4,200.
• Wedbush analyst Scott Devitt maintained an Outperform rating and price target of $3,850.
• Piper Sandler analyst Thomas Champion reiterated a Neutral rating and price target of $3,600.
• Benchmark analyst Daniel Kurnos reaffirmed a Hold rating on the stock.

Check out other analyst stock ratings.

JPMorgan: Booking Holdings reported strong results for the first quarter, beating the guidance and consensus, "but provided a softer 2Q outlook while reaffirming the 2024 guide," Anmuth said in a note.

"Mgmt continues to see resiliency in demand as it heads toward peak summer travel, & comps get easier in the back half, which makes us think the full-year outlook is conservative," the analyst wrote.

BMO Capital Markets: Connected transactions grew by 50% in the first quarter and represented a high single-digit percentage of overall transactions, Pitz said.

Asia-Pacific is growing faster than other regions, "while Booking will lean further into the US alternative accommodation market this year," the analyst added. This combination makes Booking Holdings poised for wallet share gains in 2024 and beyond, he further stated.

DA Davidson: Booking Holdings reported "solid upside" for the first quarter, with room nights up 8.5% year-on-year, "driven by a continued expansion of the booking window as well as healthy underlying demand (with better than expected performance in Europe), and less of a negative impact from the war in the Middle East than expected," White wrote in a note.

"Initial guidance for 2Q was light vs. expectations on both the topline and adj. EBITDA, reflecting management's expectation of a less expansive booking window Y/Y (vs. what BKNG saw in 1Q) and an incrementally negative impact from the Middle East war," he added.

Mizuho Securities: Booking Holdings reported room night growth of 9% year-on-year, beating expectations by 3 points, but guided to room night growth of 5% at the midpoint, 3 points lower than consensus "due to increased geopolitical headwinds and booking windows being less expanded than 1Q24," Lee said.

"Although 1H24 room night growth was uneven with outperformance in 1Q and soft 2Q guidance, management affirmed FY24 guidance," the analyst wrote. "At the same time, we are seeing encouraging signs of leverage in marketing through increased ROI and mix shift to direct booking," he added.

Oppenheimer: Although management guided to a deceleration in room night growth to 4%-6%, below consensus estimates of 7%, April trends were higher than projections, Kelly said.

"Additionally, non-Marketing opex is expected to grow mid-teens on product investments, but not expected to repeat next year," the analyst wrote. "We’re encouraged by higher direct traffic mix, and see some conservatism baked into nights based on seasonality," he added.

Wedbush: "Several moving pieces impacted results and guidance, including the timing shift of Easter into 1Q this year (from 2Q last year), the conflict in the Middle East which escalated last month, and FX headwinds given the recent strengthening of the dollar (the dollar index is up ~3% YTD)," Devitt wrote in a note.

The geopolitical and currency headwinds could be "more pronounced" in the second quarter, the analyst stated. "That said, given the magnitude of the 1Q beat, expected 1H results are still in line or above prior Street estimates across all key metrics," he added.

Piper Sandler: Booking Holdings reported bookings of $43.6 billion, representing 11% year-on-year growth, while total revenues of $4.4 billion climbed 17%, Champion said.

"New CFO Steenbergen sounded confident in the new role & is focused on growth initiatives," the analyst wrote. "On macro, the consumer remains generally strong although some noise from geopolitics," he added.

Benchmark: "If there were ever a quarter to call out a bunch of seemingly odd puts and takes, including a widening and then compressing booking window, coupled with some large timing impacts creating a $1.5 billion gross bookings beat in the quarter but a similar sized hole vs. consensus in 2Q, this was probably it," Kurnos wrote in a note.

"1H24 performance as assumed in the 2Q guide looks to be unspectacular outside of the ongoing strength in alternative accommodations, although how much of the latter is just consumer preference vs. share gains vs. supply growth is hard to parse out," he added.

BKNG Price Action: Shares of Booking Holdings had risen by 5.82% to $3,675.18 at the time of publication on Friday.

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Image: Courtesy of Booking Holdings