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Bernstein reiterated an Underperform rating on Booking Holdings (NASDAQ:BKNG) in a note Wednesday, with the firm’s $2,100 price target on the stock suggesting a potential 18% downside.
While analysts acknowledged that BKNG has had a strong 2023, up 28% so far and that the current sentiment towards the stock and sector looks attractive, they see a “more difficult narrative playing out.”
“In our view, Booking’s headline numbers have largely come at the expense of Expedia, who are now beginning to fight back through loyalty and AI. Big OTAs face a trifecta of competition — (1) tech-forward new entrants, with AI likely to bring more, (2) technology giants such as Google, and (3) the consolidation of the underlying hotel market,” explained analysts.
Regarding the strong fundamentals, Bernstein views them as “just the benefits of selling travel online” and sees similar fundamentals in their coverage in businesses with less competitive pressure and strengthening margins.
“We also challenge the view that OTAs will be resilient in a recession — the travel market is fundamentally different to 2009, OTAs do not face the same supply tailwinds and are no longer the best price discovery tool,” state analysts.
Despite Bernstein’s bearish view on the stock, Booking shares are up over 1% premarket.
