Based in Connecticut, Booking Holdings Inc. (BKNG) operates travel and restaurant online reservation and related services worldwide. The company’s flagship website Booking.com connects travelers with places to stay, including apartments, vacation homes, and five-star luxury resorts. In addition, the company operates Rentalcars.com that offers online rental car reservation services.

BKNG has been exhibiting a strong recovery from the coronavirus pandemic. As the company embraces new marketing techniques to maximize sales, it is looking to make the most  of the travel industry’s potential rebound this year. Also, as governments around the globe ease lock-down restrictions and vaccines take effect, a torrent of pent-up vacation demand created by the almost complete cessation of travel during previous months should boost its bookings volume.

The company’s continued investments in growth initiatives even in the face of adversity have helped its stock gain 5.4% over the past year. This, coupled with several other factors, has helped BKNG earn a “Strong Buy” rating in our proprietary rating system.

Here is how our proprietary POWR Ratings system evaluates BKNG:

Trade Grade: A

BKNG is currently trading higher than its 50-day and 200-day moving averages of $2066.45 and $1754.34, respectively, indicating that the stock is in an uptrend. In fact, the stock has gained 26% over the past three months, reflecting  solid short-term bullishness.

BKNG’s agency revenue has increased 382.6% sequentially to $1.72 billion in the third quarter ended September 30, 2020. Its net income rose 556.6% sequentially to $801 million, while adjusted EBITDA was $1 billion compared to a loss of $376 million in the previous quarter.

In mid-October , the company announced a new deal with Eightfold.ai to  further modernize and standardize BKNG’s talent acquisition initiatives. BKNG expects to see measurable improvements to the effectiveness and efficiency of its talent operations that will help it thrive long into the future.

Buy & Hold Grade: A

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers , BKNG is  well positioned. The stock is currently trading just 4.7% below its 52-week high of $2290.04, which it hit on January 11. This can be attributed to the company’s increasing investments in its online booking services.

Peer Grade: A

BKNG is currently ranked #4 of 69 stocks in the Internet industry. Other popular stocks in this industry are TripAdvisor, Inc. (TRIP), MakeMyTrip Limited (MMYT) and eBay, Inc. (EBAY)

While TRIP and MMYT beat BKNG by gaining 84.3%, and 110.4%, respectively, over the past six months,  EBAY lost 6.5% over this period.

Industry Rank: B

The Internet industry is ranked #36 of the 123 StockNews.com industries. Companies in this industry focus on numerous online business opportunities, including online bookings, content, auction exchanges, e-commerce sales, and advertising.

With the coronavirus pandemic’s widespread impact on the lives of so many worldwide, there has come a huge surge in internet use by people forced to stay indoors. The accelerated pace of digital transformation has been a boon to the  industry because consumers are relying much more now on online services to meet their needs.

Overall POWR Rating: A (Strong Buy)

BKNG is rated “Strong Buy” due to its impressive financials, short- and long-term bullishness, solid price momentum, and underlying industry strength, as determined by the four components of our overall POWR Rating.

Bottom Line

Although it will take some time before the travel sector regains  its old strength, the global vaccine deployment has raised hopes for a solid rebound this year. The online travel giant BKNG has plenty of upside l this year based on the factors discussed here. The company’s stronger-than-expected quarterly results and a pent-up vacation demand should drive its growth.

Analyst sentiment, which gives a good sense of a stock’s future price movement, is good for BKNG. It has an average broker rating of 1.88, indicating favorable analyst sentiment. The consensus EPS estimate of $55.94 for 2021 represents a 2111.1% improvement year-over-year. Analysts expect BKNG’s revenue to increase 52.5% year-over-year to $10.29 billion in the current year.

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BKNG shares were trading at $2,151.52 per share on Friday morning, down $31.07 (-1.42%). Year-to-date, BKNG has declined -3.40%, versus a 0.91% rise in the benchmark S&P 500 index during the same period.

About the Author: Imon Ghosh

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...

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