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Morgan Stanley analyst Brian Nowak said the firm remains Overweight on Uber (NYSE:UBER) and Google (NASDAQ:GOOGL) and tactically positive on Booking Holdings (NASDAQ:BKNG) as the latest AlphaWise data shows travel intent is holding up.
“Our latest AlphaWise survey of 2,000 Americans shows how travel demand is continuing to hold up relatively well, with 58% of people surveyed expecting to travel in the next 6 months…roughly flat with the survey from one month ago,” said Nowak.
Morgan Stanley views the spending behavior of higher-income consumers as particularly important to the health of the economy and hopes for a softer landing.
“In this case, we see that higher income households expected travel spend also remains strong…with ~80% of those surveyed expecting to travel in the next 6 months,” added the analyst.
He noted a downtick in expected travel and dining out among consumers concerned about inflation, with 63% of respondents planning to slow overall spending over the next six months due to inflation (from 59% at the end of April).
“While it is too early to call this a material risk, we intend to remain highly focused on these high frequency data points as we monitor the online travel and online food delivery sub-sectors.”
“Within names impacted by these data points, we remain OW Uber…as we see the strong travel demand as an important driver of the rideshare industry (estimated ~25% of rideshare volumes). Dining out demand matters for UberEats. Travel is also an important driver of OW-rated GOOGL’s paid search business (~10% of paid search). While we remain above Street and EW on the OTAs, from a tactical perspective we are positive on BKNG given still strong demand, its cash flow generative nature, and reasonable valuation.”
