The pandemic ravaged the travel industry worldwide. However, with the global lockdown’s end, the travel demand has boomed. In Latin America, travel revenue has reached $62.1 billion by the end of 2023, surpassing its pre-pandemic levels by 29%. As a by-product, travel technology company Despegar (NYSE:DESP) has benefited from the market’s recovery, with its stock soaring and revenues up to an all-time high.
The stock has gone up by over 150% in the past year, and expectations are high that its trajectory will continue. Investors interested in adding a stock with emerging market exposure to their portfolios might find this interesting.
Despegar’s Leading Travel Technology
Despegar is a travel technology company in Latin America with operations in 20 countries. The company operates under two popular brands: the global Despegar and the Brazilian Decolar. It offers an array of travel products, such as airline tickets, vacation packages, hotels, and vacation rentals, to a customer base of over 25.7 million people.
In 2024, the company’s app use has grown dramatically, with transactions hitting a new record high. During the first quarter, 48.9% of total transactions were made on the company’s apps, compared to 36.1% in the same period last year.
A Look at Despegar’s Recent Financial Results
In the first quarter of 2024, the company reported results that exceeded expectations on the top line, though missed on the bottom line. Thanks to an increase in gross bookings by 12% year-over-year to $1.3 billion, revenues increased 9% year-over-year to $173.7 million, beating expectations by $2.14 million.
Despegar recorded an increased Adjusted EBITDA of 126% year-over-year to $39.0 million, fueled by improved operational efficiency and increased high-margin Travel Package sales. This resulted in earnings per share (EPS) of $0.07, which lagged consensus expectations of $0.14.
The total Cash position at the end of March 2024 was $213 million, which was down $14.9 million year-over-year due to working capital strategies, dividend payments to shareholders, and seasonal trends. The company’s updated guidance for 2024 includes revenue of “at least” $820 million (representing 16% year-over-year growth) and adjusted EBITDA of at least $155 million (representing 34% year-over-year growth).
What Is the Price Target for DESP Stock?
Analysts covering the company have been cautiously optimistic about the stock. Cantor Fitzgerald analyst Brett Knoblauch recently raised the price target on the stock from $14 to $17 while maintaining an Overweight rating, citing the company’s top-line outperformance, expense discipline, and belief the story has more room to run.
Despegar is rated a Moderate Buy based on three Wall Street analysts’ recommendations and price targets over the past three months. The average price target for DESP stock is $16.83, representing a 13.95% upside from current levels.
The stock has been strongly trending up, climbing roughly 75% in the past 90 days. It sits at the high end of its 52-week price range of $5.55-$15.54 and continues to show positive price momentum, trading above its 20-day (12.58) and 50-day (11.82) moving averages.
Final Thoughts on DESP
As one of the largest online travel agencies in Latin America, Despegar is well-positioned to benefit from the region’s ongoing growth in travel and tourism. The stock shows positive momentum, and analysts expect it to continue its upward trajectory. Investors interested in finding a compelling emerging market story may find this stock of interest.
