Argus: Booking Holdings Has 20% Upside Potential

Booking Holdings Inc. BKNG, formerly Priceline.com, is likely to maintain its position as the leading online travel agency through continued investments in marketing and advertising, an analyst at Argus said.

The Analyst

Argus analyst John Staszak upgraded shares of Booking Holdings from Hold to Buy and set a $2,520 price target, representing roughly 20-percent upside from current levels.

The Thesis

Booking Holdings' valuation inadequately reflects growth in the core online travel agent business and its strong market share, Staszak said in a Thursday note. (See the analyst's track record here.) 

"The company's Booking.com brand has the opportunity to expand in Asia, Latin America and North America, while continuing to grow in Europe, where it is a market leader," the analyst said. 

Additionally, the company has the ability to grow its alternative accommodative business, which includes bed-and-breakfast and home rentals, Staszak said.

Argus expects revenues to increase 12 percent to $14.2 billion in 2018 thanks to higher volume and moderate price increases. An improving economy and effective marketing could prop up the company's European business, Staszak said.

Argus raised its earnings per share estimate for 2018 from $85 to $87 and established a 2019 estimate of $100, with both estimates sitting above consensus expectations.

The Price Action

Booking.com shares are up about 22 percent over the past year.

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