Analysts are adjusting their price target on Bookings.com shares in the travel market

In this life, you must always be on the lookout for the second arrow.

There is a Buddhist parable that compares the unexpected things that happen to us to an arrow shooting through the air.

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We can’t do much about the first, the parable goes, “but we can control how we respond to the second arrow, which is fueled by our reaction and judgment.”

Glenn Fogel has seen more than a few arrows in his career.

Chairman and CEO of Booking Holdings (BKNG) whose subsidiaries include Kayak, Priceline.com, Cheapflights and Bookings.com, recently shared his thoughts on answering whatever life throws at you.

“Our goal is always to gain share,” Fogel told analysts on Aug. 1. “Whether the market goes up or down, I can’t control the demand. I can’t control the savings. What I can control is how. Well, we can provide value to travelers and suppliers.

“And as long as we continue to do that, as long as we continue to provide a reason why people should come to us as a traveler or use us as a way to distribute someone’s travel providers, we will continue to we win.”

Fogel made the comments during the company’s second-quarter earnings call, where he said some things were out of his control.

Analysts issue research notes for Booking Holdings.

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Booking Holdings CEO: “There will be volatility”

“There will be volatility, there will be variations, there will be events (that) will happen globally, macro events that can influence a quarter or a week or a day,” he said. “But in the long term, we continue to build what we’ve been trying to build for a long time, which is a better service, and that’s what we’re doing.”

The travel sector saw a whole mess of volatility in July during CrowdStrike (CRWD) collapse, where a faulty update to the company’s Falcon Sensor security software triggered what has been called the largest IT outage in history.

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Fogel said the incident “didn’t affect us very much,” but added that the outage “significantly hit some of our supplier partners.”

“It’s a problem when … critical infrastructure breaks down and then disrupts the lives of millions and millions of people,” he said. “And hopefully it won’t happen again. We hope people test their products before they put them on the market. And hopefully there are backups.”

For the quarter, Booking Holdings earned $44.38 per share, up 27% from the previous quarter, while revenue rose 7.3% to $5.86 billion.

Fogel said the company saw moderate growth in the European travel market, but added that “we continue to perform well relative to the European market.”

And the company continues to see strong growth in Asia and slightly improving growth in the U.S., he said.

Chief Financial Officer Ewout Steenbergen said Booking Holdings expects room-night growth of 3% to 5% in the third quarter, a sequential slowdown as the company expects the third quarter to benefit from less of an expansion of on a year-over-year basis of the booking window than it saw in Q2.

“For the third quarter, we expect the booking window to be more similar to last year,” he said. The booking window is the time between a customer making a booking and when the customer arrives.

For the full-year outlook, Steenbergen said the company is adjusting its gross bookings growth expectations to more than 6%, less than previously expected, due to lower growth in flight bookings as a result of lower airfares.

“Although flight prices have decreased, we still expect strong airfare growth for the year as we continue to expand flight offers on Booking.com and Agoda,” he said.

Analyst worried about traffic growth

Gross travel bookings refer to the total dollar value, generally including taxes and fees, of all travel services booked by customers, net of cancellations.

Investment firms have issued research reports on Booking Holdings, including Truist, which initiated coverage on the company on September 6 with a hold rating and a $4,100 price target, according to TheFly.

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Booking is the global leader in online travel and is well positioned for secular growth in global travel, the investment firm said.

However, Truist said decelerating vacancy growth in what is now year five of the current lodging cycle is driving the hold rating.

Firm. which also initiated Expedia’s coverage (EXP) with a hold rating and a $148 price target, attributed the rating to moderate macroeconomic growth and a strong stock market reaction following the earnings report, despite modest guidance revisions.

Cantor Fitzgerald started coverage on Booking Holdings with a neutral rating and a $3,590 price target.

While the company likes Booking’s competitive position, financial profile and valuation in the online travel space, the analyst expresses concern about the broader cyclicality of the travel market, which “tempers our enthusiasm for near-term actions.”

And Jefferies downgraded Booking Holdings to hold from buy with a price target of $4,200, down from $4,350.

The firm said the sustainability of room-night growth is the key debate for online travel, following disappointing guidance for the second half of 2024 and weaker demand in July.

Its top-down industrial model suggests growth will moderate further over the next three years, leaving estimates below consensus.

Jefferies said Booking’s consensus downside is likely to exceed its peer-leading free cash flow.

While Booking delivers top-notch execution, the stock’s upside is capped by the risk of declining room nights, the firm said.

Jefferies said it is also concerned that a currently high booking window could reverse in 2025, creating a headwind for room-night growth in the near term.

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