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Key Takeaways
- Booking Holdings has lowered its outlook for the full year due to concerns about the U.S. Travel industry.
- Analysts believe the company will be able offset any decline in U.S. demand for travel by improving global travel.
- The company's first-quarter earnings topped analysts' estimates.
Booking Holdings (BKNG), amid concerns over the U.S. tourism industry, widened their full-year outlook. Analysts say the company’s international operations will help counteract a decline in U.S. holiday bookings.
Booking on Tuesday reported better-than-expected earnings, but widened the lower ends of its projected ranges for full-year revenue and gross bookings, saying its business "could be impacted by the increased uncertainty in the geopolitical and macroeconomic environment." The company now expects that both measures will grow by mid to high single digits.
The company has seen a "moderation in trends for inbound travel into the U.S." so far this year, particularly from Canada, CFO Ewout Steenbergen said, according to a transcript provided by AlphaSense.
U.S. travelers have also decreased their length of stays, and the CFO said Booking has seen "some evidence of a bifurcated economy in the U.S." as demand for hotels with higher star ratings have seen demand stay more stable than their lower-star counterparts.
Analysts Say Booking's Global Footprint Could Help Offset US Weakness
JPMorgan analysts and UBS analysts raised their price targets in response to the report. The JPMorgan analysts said that Booking's operations across the globe should help the company offset any weakness in U.S. travel activity.
UBS analysts also suggested Booking could be able to continue growing revenue and profits even if hotel room bookings slow, as the company pushes further into offering booking options for "alternative accommodations, flights, ground transportation, and attractions."
Jefferies analysts were more cautious, with a "hold" rating and $5,000 price target. They wrote Wednesday that they are keeping their "hold" rating on concerns "macro uncertainty could limit medium-term growth and stock upside."
Recent trading showed little change for booking shares. They were trading at around $4,953. They've added about 45% in the past 12 months.