Booking Holdings (BKNG), parent company of travel great Priceline, provides travel and restaurant online reservation and related services worldwide. The company managed to put on quite a recovery in recent trading. The company rolled out its earnings report, and that was enough to give the stock price a 6.4% boost, so far.
Even though BKNG was sufficiently cautious to warn about potential issues to come, investors were still sufficiently behind the company to buy in. That kind of sentiment is hard to fight, and that’s why I’m bullish on Booking Holdings as well. (See today’s best-performing stocks on TipRanks)
A look at Booking Holdings stock this year shows a wildly erratic trading pattern. The company’s entire 2021 is marked by plunges and rapid recoveries.
Back in January, the company saw a closing price low in the $1,800s. Four months later, it briefly broke $2,500 before dropping back to just over $2,000 in mid-August. Another recovery followed, and the company briefly broke $2,500 once more before slipping just a bit back. (See Booking Holdings stock charts on TipRanks.)
Booking Holdings’ earnings report gave investors a lot to like. The company offered earnings for the third quarter of $37.70 per share. Impressive as that may be, it destroyed estimates by an equally impressive margin. The Zacks consensus called for just $31.56 per share.
Additionally, Booking Holdings devastated the numbers from a year ago; the company posted just $12.27 per share in earnings this time last year.
Revenue proved a similar, if not so pronounced, win. The company posted $4.68 billion in revenue for the quarter. That was not only enough to beat the Zacks consensus by 12.52%, but it was also enough to nearly double last year’s figure of $2.64 billion.
Throwing Caution to the Wind
On the surface, these kinds of moves for Booking Holdings make sense. With the world coming back to something resembling a pre-COVID normal, seeing people traveling again is just part of that. Since Booking Holdings runs Priceline, that means people can put that platform to work once more and find all the best travel deals.
This is great news on several fronts. Not only does it mean recovery for Booking Holdings, but for the world as a whole. Sure, things are still kind of weird right now. The whole vaccination argument is circulating and doing a number on workforce prospects, and that may trickle down into everyday operations.
When businesses can’t bring in the unvaccinated to help serve customers, will there be enough vaccinated to do the job? Or, are businesses about to run into a whole new labor crunch complete with delays?
What’s more, even Booking Holdings itself is suggesting a note of caution to travelers. The company noted that a resurgence of COVID-19 in Europe may put a damper on year-end demand. It certainly would do that, but the usual question remains: Do governments have the political will for more lockdowns?
There’s evidence to suggest that’s not the case; a recent study from the UK government revealed that its “Plan B” protocol—a stricter response that basically means “more lockdowns”—would cost the country 18 billion pounds sterling, or about 24.3 billion USD.
Still, Booking Holdings is doing the responsible thing here in warning its investors. More lockdowns will hurt the travel company in the holiday quarter, if they ever actually happen.
Wall Street’s Take
Turning to Wall Street, Booking Holdings has a Moderate Buy consensus rating, based on eight Buys and eight Holds assigned in the past three months. The average Booking Holdings price target of $2,803.33 implies 7.9% upside potential.
Analyst price targets range from a low of $2,400 per share to a high of $3,100 per share.
Concluding Views
You’ve got to hand it to a company that’s willing to warn its investors of a fate that would be a disaster, if a somewhat unlikely disaster. That’s putting all the cards on the table, and that takes a lot of internal fortitude.
That said, the odds of those conditions hitting are fairly slim. I personally would consider the bigger danger to be people reconsidering travel altogether in the face of growing inflation almost everywhere.
Still, Booking Holdings is keeping its investors’ best interest in mind. That’s extremely positive, and when you consider how well the company is doing overall, it’s hard not to be bullish on this investor-centric company.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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