Booking Holdings Stock To Likely Trade Lower Post Q4

Booking Holdings (NASDAQ: BKNG), the world’s largest online travel agency that offers services from lodging to airline tickets to car rentals, is scheduled to announce its fiscal fourth-quarter results on Thursday, February 23. We expect the company’s stock to likely trade lower with revenues missing market expectations and earnings coming almost in line. Booking’s financial results showed a massive rebound from extremely difficult conditions in the year-earlier quarter thanks to a significant recovery in tourism so far in FY 2022. However, a slight concern here is the dip in the Room Nights in Q3 2022 – which declined sequentially from $246 million in Q2 2022 to $240 million in Q3 2022. Historically, the third quarter has been the seasonally strongest for the company as it tends to make an outsize portion of its annual profits during the peak summer months. Despite these early signs of slowing growth, whether and to what extent this will continue, remains to be seen in the upcoming Q4 report. As such, macro conditions are worsening and pose a great risk to the business in 2023.

(1) Revenues expected to be well below the consensus estimates

Trefis estimates Booking Holdings’ Q4 2022 revenues to be around $3.7 Bil, down nearly 6% from the consensus estimate level. In Q3, the online travel agency’s revenues grew 29% year-over-year (y-o-y) to $6 billion, driven by a 36% y-o-y increase in gross bookings to $32 billion. Room nights booked increased 31% from the prior-year quarter, rental car days were up 24.9% y-o-y, and airline tickets booked jumped 45.1% y-o-y in Q3. Further, BKNG’s adjusted EBITDA was up 26% y-o-y to $2.7 billion to top the consensus estimate of $2.6 billion. For the full-year 2022, we expect Booking Holdings revenues to grow 56% y-o-y to $17.1 billion.

(2) EPS likely to almost match the consensus estimates

Booking Holdings’ Q4 2022 earnings per share (EPS) is expected to come in at $22.02 as per Trefis analysis, almost matching the consensus estimate of $22.24. The company’s adjusted earnings per share rose 41% y-o-y to $53.03 in Q3.

(3) Stock price estimate lower than the current market price

Going by our Booking Holdings’ Valuation, with an earnings per share estimate of around $97.57 and a P/E multiple of 22.4x in fiscal 2022, this translates into a price of $2185, which is 11% lower than the current market price.

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