Analysts Initiate Coverage Of Airbnb: 'Best-In-Class Travel Company With A Premium Valuation'

High-profile December IPO Airbnb Inc ABNB is off to a volatile start on the public market.

The vacation rental giant priced its IPO shares at $68 early last month, but the stock more than doubled when it opened at $146 the following day. The momentum continued, pushing Airbnb shares as high as $174.97 before the stock pulled back to start 2021 trading at around $145.

Airbnb has understandably struggled during the pandemic given a steep drop in travel and vacationing. The company reported a 19% drop in revenue in the most recent quarter, but investors are optimistic its growth will return once the economy recovers in 2021 and beyond.

Several of Airbnb’s IPO underwriters finally weighed in on the stock on Monday following their mandatory quiet period.

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A Unique Disruptor: DA Davidson analyst Tom White said Airbnb has created an entirely new travel product category and has a powerful and valuable global brand.

“We expect these unique strengths, combined with a $2T market opportunity for short + long-term stays, will support durable growth at ABNB for years to come and LT EBITDA margins >30%,” White wrote in a note.

Raymond James analyst Aaron Kessler said Airbnb is unlocking untapped value for its hosts, guests and communities.

“We believe Airbnb can deliver topline growth of 20%, plus over the long-term, shift to alternative accommodations, continue new guests and hosts growth, platform innovation, adoption of new product offerings, and global expansion,” Kessler wrote.

Needham analyst Brad Erickson said Airbnb is the only online travel option in the world that isn’t reliant on Google.

“The company is the category creator and clear leader in private & alternative accommodations, a market that could expand as much as 5-10x from its current size as it democratizes travel,” Erickson wrote.

Impressive Growth, Full Valuation: Morgan Stanley analyst Brian Nowak said Airbnb is clearly a leading travel industry disruptor, but its valuation appears full at a market cap of $87 billion.

“We expect brand leadership to drive scalable growth even through investment (14% '19-'24 CAGR rev, 18% '24 EBITDA margin), but a 16X rev mult seems full,” Nowak wrote.

KeyBanc analyst Justin Patterson said Airbnb is a “best-in-class travel company with a premium valuation.”

“While we are confident in share gains and take rate expansion, we believe this is priced into shares based upon a valuation of ~28.4x 2025E EBITDA vs. BKNG at ~11.2x),” Patterson wrote.

Bank of America analyst Justin Post said Airbnb is a pioneer in the sharing economy and is highly exposed to a recovery in the travel industry.

“However, with the stock up 116% from the $68 IPO price (vs 1.2% for the S&P 500) and currently valued at a premium at 16x 2022 P/S, 21x P/Gross profit, and 153x 2022 EBITDA (vs. marketplace group averages at 8x, 16x & 61x, respectively), we don’t expect significant multiple expansion from here,” Post wrote.

ABNB Ratings And Price Targets: Morgan Stanley has an Equal-Weight rating and $140 target.

DA Davidson has a Buy rating and $172 target.

Raymond James has a Market Perform rating.

Needham has a Buy rating and $200 target.

KeyBanc has a Sector Weight rating.

Bank of America has a Neutral rating and $158 target.

The stock is down about 2.5% to $143.11 at publication time.