On Friday, RBC Capital Markets analyst Brad Erickson increased the price target on Booking Holdings (NASDAQ:BKNG) to $5,900 from the previous $5,250, while maintaining an Outperform rating on the stock. The company, currently valued at $166.25 billion, has seen its stock surge nearly 35% over the past six months. Erickson’s adjustment follows Booking Holdings’ fourth-quarter earnings, which surpassed expectations. According to InvestingPro data, the stock is trading near its calculated Fair Value, with a P/E ratio of 33.8x.
Erickson attributes the better-than-expected performance to the company’s consistent ability to under-promise and over-deliver. The company maintains impressive gross profit margins of 85.87% and achieved revenue growth of 11.11% in the last twelve months. Despite the potential for foreign exchange rates to impact Wall Street’s numbers, as current estimates do not fully account for this factor, Erickson sees this as a typical post-earnings adjustment period. He has revised his own estimates downward but has introduced projections for 2026, which support the new price target based on a 20 times enterprise value to estimated 2026 EBITDA multiple, compared to the current EV/EBITDA multiple of 20.41x.
The analyst highlights several key factors that underpin the Outperform rating for Booking Holdings. These include the company’s faster growth compared to peers at a much larger scale, a robust toolkit for growth that encompasses flights, payments, and loyalty programs, and a shift towards direct and mobile bookings that is expected to leverage fixed costs effectively. Additionally, Erickson notes Booking Holdings’ strong and growing capital returns, marked by a recent buyback initiative and an increased dividend.
Erickson concludes by acknowledging that while the valuation of Booking Holdings may continue to be a point of debate among investors, he advocates for the stock based on the company’s status as a high-quality asset within RBC Capital Markets’ internet coverage universe. InvestingPro analysis supports this view, assigning the company a "GREAT" financial health score of 3.48. For deeper insights into BKNG’s valuation metrics and 12 additional exclusive ProTips, consider accessing the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Booking Holdings has seen a series of updates from various financial analysts following its recent earnings report. Benchmark analyst Daniel Kurnos raised the price target for Booking Holdings to $5,900, maintaining a "Buy" rating, influenced by the company’s room-night guidance and strategic reinvestment plans, although margin expansion is expected to be slightly below consensus. BMO Capital Markets also increased its target to $5,900, citing Booking Holdings’ growth in gross bookings and room nights, along with an 8% increase in alternative accommodation listings, and maintained an "Outperform" rating. Piper Sandler adjusted its price target to $5,120, keeping a "Neutral" rating, noting the company’s consistent earnings performance and conservative future guidance.
Evercore ISI’s Mark Mahaney raised the price target to $5,500, maintaining an "Outperform" rating, highlighting Booking Holdings’ robust growth in bookings, revenue, and room nights, especially in accommodations and flights. Goldman Sachs revised its target to $5,020 while maintaining a "Neutral" rating, emphasizing the company’s strong fourth-quarter performance and strategic focus on artificial intelligence to enhance customer conversion and operational efficiency. These developments reflect a general confidence among analysts in Booking Holdings’ strategic initiatives and growth potential, despite varying ratings and expectations for margin expansion.
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