Booking Holdings Inc. (NASDAQ: $BKNG) is a leading provider of online travel and related services. It offers a one-stop shop for travelers, including reservations for rental cars, hotels, cruises, and travel packages. The company also provides a price comparison service and a booking service for airline tickets.
On Friday, February 23, 2024, it released its Q4 and full-year fiscal 2023 to a disappointing market reception.
Booking Holdings Q4 Results
In the fourth quarter, Booking Holdings reported a 29% Y/Y increase in EPS to $32, above estimates of $29.72. In fiscal 2023, the company’s quarterly EPS beat estimates 100% of the time.
Fourth quarter revenue increased 18% Y/Y to $4.78 billion, surpassing estimates by 2.74%. In fiscal 2023, the company beat quarterly revenue estimates 100% of the time.
Gross travel bookings, an important metric used by investors, grew 16% Y/Y to $31.7 billion, while room nights booked grew 9% Y/Y.
For the full year, total revenue increased 25% to $21.4 billion compared to fiscal 2022, while FY23 net income increased by 40% to $4.3 billion. The full-year EPS grew by 52% to $152.22, while adjusted EBITDA increased by 34% to $7.1 billion.
Quarterly Dividend
Booking Holdings announced it would start issuing a quarterly dividend. For Q423, the board issued a dividend of $8.75 per share, to be issued on March 8, 2024. Going forward, the company plans to issue a dividend every quarter.
Guidance Falls Short of Expectations
For Q1, Booking Holdings expects room nights booked to increase by 4%-6%, with the ongoing Middle East conflict having a 1% impact on room night growth. The company expects gross bookings to grow 5%-7% in Q1, below Morgan Stanley’s estimate of 10%.
Booking Holdings projects revenue will grow 11%-13% in Q1 to $4.26 billion at the midpoint, in line with estimates of $4.24 billion. It expects Q124 EPS to grow 15% to $13.34, below estimates of $13.76.
The company expects an adjusted EBITDA of $680-$720 million in Q124, a 19% Y/Y increase at the midpoint, and around a 1% increase in EBITDA margin.
For the full year, the company projects gross bookings will grow by slightly over 7%, with an assumption of a 1% impact from the Middle East conflict. The company is also projecting that revenue will grow by just above 7% for the full year.
Booking Holdings forecast adjusted EBITDA margins will increase by just below 0.5% Y/Y, while FY24 EPS is expected to increase by over 40%.
Booking Holdings (BKNG) Stock Performance
BKNG stock dipped after the results came out, on a disappointing guidance. As of 12:17 PM EST, the stock was down 9.13% to $3,545.73, a $356.26 in the stock price.
Before the Q4 results came out, Booking Holdings had reached an all-time high of $3918.00 and was touted as an example of resilience amidst adversity. However, the Q1 outlook miss, coupled with project disruption from the ongoing Middle East conflict, sent investors scrambling for the exit.
Despite the recent slump, the stock is up 59.10% year-to-date, compared to the 28.14% gain of the S&P 500. Additionally, it is above its 50-day and 200-day moving averages of $3,562.09 and $3,084.74, respectively.
BKNG Stock Forecast
Despite the recent slump in price, analysts remain cautiously optimistic about the future of BKNG stock, giving it an overall moderate buy rating. Analysts have set a board target range for the stock, with a high of $4,380 and a low of $3,584. Their average price target for the stock is $4,000.18, a 2.52% upside.
Should You Buy BKNG Stock
The recent Q4 results from Booking Holdings led to a loss of confidence in its stock performance. One reason for this is its expensive valuation; it has a forward P/E ratio of 22.17, compared to 11.75 for rival Expedia.
However, some analysts are still optimistic about the future of BKNG stock. For instance, Morgan Stanley raised its price target for BKNG stock from $3,000 to $3,700 despite missing its estimates. The analysts at Morgan Stanley pointed to early signs of efficiency gains from AI adoption.
As Booking Holdings and the entire travel industry navigate headwinds in 2024, there is a lot of cautious optimism amongst investors. However, if Booking Holdings adapts to changes successfully, it could outperform the industry.
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