Booking Holdings (NASDAQ:BKNG) shares have been incredibly hot, recently surging to a new all-time high, just shy of $3,500 per share. Indeed, the booking company has made the most from the travel recovery. As the firm carries its newfound strengths into 2024, shares may very well be able to hit the current Street-high price target of $4,000 per share held by UBS, a target that would entail a modest 15% gain from current levels.
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How could BKNG stock get to $4,000? As rates fall in the new year, with three (or possibly more) rate cuts penciled in, Booking may be able to get enough of a boost to break through its Street-high target. Anticipation of lower rates alone could entice consumers to feel better and perhaps spend a bit more than they otherwise would have on a vacation.
At the end of the day, Booking stands out as a market leader that’s flexing its network muscles. Plus, if the economy lands softly, BKNG stock’s run could easily extend and bring forth further price target upgrades from the analyst community. Additionally, the company’s foray into cruises could pay major dividends as the cruise lines begin sailing again after many years of subpar demand. All things considered, I remain bullish on BKNG stock despite the hot run that’s now behind it.
Booking Holdings Stands Above Its Peers
Booking Holdings is one of the best travel booking plays, thanks to its impressive position in the European market and the firm’s willingness to roll out new innovations across its platform. As I pointed out in a prior piece, I noted that the European market tends to focus on smaller boutique experiences relative to the U.S., which tends to favor big-name hotel chains and their subsidiaries. In the States, the heavyweights are tough to top, but in Europe, it’s the lightweights that have the edge.
Recently, Ramiz Chelat, portfolio manager over at Vontobel Asset Management, also remarked on the company’s European exposure, noting that Europe represented a “structurally better market.” Indeed, as Europeans really start to spend on travel, they’ll be headed over to a Booking site rather than some of the U.S. ones Americans may be more familiar with.
On the innovation side, Bookings’ move into cruises and further updates to its impressive generative artificial intelligence (AI) capabilities could help widen its moat and gain more ground over its peers in the booking market.
Booking Holdings is Cruising for More Market Share
Booking’s move into the world of cruising couldn’t have come at a better time. Cruise line stocks have been soaring of late, led by Royal Caribbean Cruise (NYSE:RCL) and Carnival (NYSE:CCL), which are up 149% and 135%, respectively, on a year-to-date basis.
Cruise booking demand has been incredibly robust, and it could strengthen further in the new year if consumer confidence kicks it up a notch as the Fed looks to slash rates rather than raise them. Cruise lines themselves expect more strength (perhaps record bookings) for the year ahead. It’s hard to go against the trend, in my opinion.
Even if cruising demand bounce fades into 2024, Booking’s move into cruising seems like a low-risk endeavor to gain share in a corner of the travel market that’s absolutely booming right now. My guess is that Booking will book itself nice profits as it looks to allow more than 10,000 sailings across 30 different cruise lines.
AI Could be a Wild Card for the Booking Industry
The booking industry isn’t shying away from the rise of AI. Back in June, the company unveiled its AI-powered trip-planning service. The reveal went a bit under the radar. Though AI Trip Planner may not be the preferred way to book a vacation in the near future, I think it could help prospective travelers book their dream vacation in the quickest way possible.
Additionally, I think there’s a means for Booking to upsell and jolt margins as its AI service looks to make recommendations to customers. Either way, AI is a win for Booking as it looks to add value to the firm and its customers, perhaps at the same time.
For now, AI Trip Planner has a ways to go if it’s to catch up to the likes of ChatGPT. If Booking can integrate well with the popular large language model (LLM), the company could gain market share over rivals as it looks to take its dominance to the next level. Indeed, travelers of the future may just communicate verbally with ChatGPT and have everything taken care of by a Booking plug-in.
Is BKNG Stock a Buy, According to Analysts?
On TipRanks, BKNG stock comes in as a Moderate Buy. Out of 19 analyst ratings, there are 13 Buys, five Holds, and one Sell recommendation. The average BKNG stock price target is $3,422.88, implying downside potential of 1.6%. Analyst price targets range from a low of $2,402.00 per share to a high of $4,000.00 per share.
The Bottom Line
Booking Holdings seems destined for greater market share and growth as it pursues AI, cruisers, and maximum benefit from travel’s ongoing recovery. With an enviable network and a mere 24.6 times trailing price-to-earnings multiple, which puts it right in line with the travel service industry average of 24.6 times, it’s hard not to want to buy while the momentum’s on the firm’s side.
