It’s been a choppy past year for shares of Booking Holdings (NASDAQ:BKNG) stock. After surging more than 40% off its 2022 low on the back of a recovering travel scene, questions linger as to whether the booking giant can continue its rally momentum into a new year. Undoubtedly, 2023 is likely to be a recession year, the severity of which remains a huge question mark on the minds of many market participants.
Travel tends to be sensitive to the health of the overall economy. In a pandemic, local outbreaks and new variants of COVID-19 are also possible things to think about. Undoubtedly, the worst of the pandemic seems to be well behind us.
That said, the pandemic is still not yet over. With new variants that could dominate the new year (think the XBB 1.5 variant), the potential impact on travel’s continued recovery is uncertain. We’re all ready to move on from the pandemic. However, investors must weigh all risks before putting any money to work.
Booking Holdings Stock: Major Bullishness from a 5-Star Analyst
At this juncture, investors seem quite upbeat about Booking’s prospects despite recession headwinds and the spread of a new COVID-19 variant. Wall Street analysts remain upbeat, with one analyst (Ivan Feinseth of Tigress Financial) going as far as to call the name “one of the best ways” to invest in the “travel recovery.”
I think Feinseth is right on the money; Booking Holdings stock is one of the best, if not the best, names to ride travel’s comeback.
As a five-star-rated analyst, Feinseth is a man who’s made a lot of right calls. With a Street-high $3,210 price target on Booking Holdings stock, I do think recent investor optimism is warranted. Feinseth sees growth ahead for Booking. Further, he’s also a fan of the company’s “strong balance sheet and cash flow.”
With more than $9 billion in cash and cash equivalents, Booking Holdings has the dry powder to weather a storm and repurchase shares while they’re relatively undervalued.
At writing, BKNG stock doesn’t look too cheap at 36.5 times trailing earnings and 5.6 times sales. That said, Booking is a top dog in the space with a moat that I view as much wider than peers due to its dominant presence and network edge in Europe. Such a moat deserves a premium, and right now, the current price tag may not be all that absurd, even with the current slate of headwinds.
Indeed, not only do many optimistic analysts think Booking can power through pandemic jitters, they think a mild-to-moderate recession may be less of a concern as the travel industry continues to find its footing.
Once Booking Holdings is on stable footing (many think it already is), it may be tough to knock down once expected headwinds come knocking.
I share analyst enthusiasm for the name. Booking is a best-in-breed stock. I am bullish.
Does the Travel Industry Still Have Legs?
Only time will tell what the recession does to travel’s ongoing recovery. There’s likely still quite a bit of pent-up demand out there after a pandemic-plagued past few years. As China reopens its doors, moving on from draconian zero-COVID policies, I think travel still has legs, as an economic slowdown adds another weight on consumers’ backs (the other being ongoing inflation).
In any case, the longer-term outlook looks bright for the industry and Booking. A 2023 recession could come and go quicker than those in the past (perhaps with the exception of the 2020 recession). All things considered, Booking is a firm that’s more than capable of taking market share, regardless of where the industry heads over the near-to-medium term.
Is BKNG Stock a Buy, According to Analysts?
Turning to Wall Street, BKNG stock comes in as a Strong Buy. Out of 19 analyst ratings, there are 15 Buys and four Holds. The average Booking Holdings price target is $2,391.76, implying upside potential of 3.9%. Analyst price targets range from a low of $2,050.00 per share to a high of $3,210.00 per share.
The Bottom Line on Booking Holdings Stock
Booking Holdings stock seems like a tough hold ahead of a global downturn. Still, the company has a lot going for it as it looks to play on its strengths. It’s not just hotels where Booking can shine as it looks to ramp up growth. Vacation rentals and other parallels are also an area where the firm can effectively leverage its impressive network.
