Strong travel demand at present is not likely to last long, according to a new analysis from Truist. As such, expectations for online travel names like Booking Holdings ( NASDAQ: BKNG ), Tripadvisor ( NASDAQ: TRIP ), Trivago ( TRVG ), and Expedia ( NASDAQ: EXPE ) must be tempered.
The research noted that a stronger dollar particularly hurts Booking Holdings ( BKNG ), Airbnb ( NASDAQ: ABNB ), and Expedia ( EXPE ) given their worldwide reach. More broadly, rising costs for travel alongside a weakening macroeconomic backdrop add pressure across the space.
“While [near-term] travel demand appears strong, we're revising our [online travel agency] estimates broadly lower heading into 2Q earnings to reflect a hit from a stronger USD as well as mounting risks to demand in 2023 amid an increasing likelihood of economic weakness/recession,” a team of analysts at the bank wrote.
As such, the team subsequently trimmed price targets Airbnb ( ABNB ) to $120 from $160, Booking Holdings ( BKNG ) to $2,600 from $3,000, Expedia ( EXPE ) to $185 from $240, and Trivago ( TRVG ). to $2.30 from $3.00.
To be sure, the recent selloff across the space provides opportunity in the specific stocks despite the target trimming. Booking Holdings ( BKNG ) and Expedia ( EXPE ) were pinpointed as “attractively valued” stocks at present given each is trending at low levels as compared to historical averages. Buy ratings were assigned to Booking ( BKNG ), Expedia ( EXPE ), and Tripadvisor, while Airbnb ( ABNB ) and Trivago ( TRVG ) were rated “Hold.”
Read more on recent turbulence for travel stocks .
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Truist takes down estimates for online travel stocks amid rising recession risk