Booking Holdings Inc (Nasdaq: BKNG) stock took a nosedive on Thursday morning, dropping more than 5 percent after the company’s guidance disappointed Wall Street. Despite the short-term hiccup, analysts remain optimistic about Booking’s long-term outlook given its dominant position in the high-growth online travel market.
Booking reported second-quarter adjusted earnings per share of $20.67 on revenue of $3.54 billion. Both numbers exceeded consensus analyst estimates of $17.44 and $3.44 billion, respectively. Revenue was up 20 percent from a year ago.
However, it was Booking’s guidance that caught the market’s eye. The company is predicting third-quarter EPS of between $36.70 and $37.70, well below consensus expectations of $39.80. The company is also calling for revenue growth to dip to between 6 percent and 9 percent in the third quarter, its lowest growth rate since 2015.
The third quarter includes the critical summer travel season, which makes the guidance miss even more disappointing for investors.
In a statement, CEO Glenn Fogel focused on Booking’s solid second-quarter performance.
“Booking Holdings achieved strong results for the second quarter,” Fogel said. “We will continue to execute on our long-term strategy to drive profitable growth and invest in capabilities to increase customer loyalty and build a larger direct business.”
In the second quarter, Booking reported gross travel bookings of $23.9 billion, up 15 percent. Looking ahead to the third quarter, the company said it expects gross travel booking growth to drop to between 5 percent and 8 percent on a constant-currency basis.
Bank of America analyst Justin Post says the third-quarter outlook was certainly disappointing, but it doesn’t change his bullish stance on BKNG stock.
“The primary disappointment is that 3Q outlook is for decelerating bookings and room night bookings growth versus 2Q despite easier [year-over-year] comps,” Post says.
However, he says there’s a possibility Booking management is being overly conservative.
“While the 3Q outlook will be seen as a disappointment and likely pressure the stock near term, there are…
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