Booking Analyst Warns 2020 May Be ‘Lost Year’ Due to Coronavirus

(Bloomberg) -- Booking Holdings Inc. shares slipped as Wall Street worried about the extent that fear about the spread of coronavirus will curb global travel trends.

At least three analysts reduced their bookings projections for the year given limited visibility after the company said it’s impossible to predict where and how the outbreak will disrupt travel. A bleak outlook for the first quarter overshadowed fourth-quarter revenue and earnings that topped the highest analyst estimates.

Wedbush analyst James Hardiman cautioned that 2020 could wind up being a “lost year” for the company. The shares fell as much as 5.1% to their lowest level in three years.

Here’s what Wall Street is saying:

Jefferies (Brent Thill)

Hold, price target cut to $1,800 from $1,900

“With the stock down 18% YTD we think investors were anticipating substantial 1Q weakness, and many will view the guidance as appropriately conservative.”

While Booking beat estimates across all key metrics in fourth quarter, “investor concern is shifting to coronavirus” as management expects revenue and Ebitda for the first quarter to decline.

Management expects the new payments platform to reach 25% of the company’s gross bookings, “which we believe will drive accelerating growth in the merchant business and create a more frictionless booking experience.”

Piper Sandler (Michael Olson)

Neutral, price target $1,750 from $1,900

“As many were anticipating, the coronavirus is impacting global travel trends, which management indicated has already been detrimental to 1Q results to date and creates a high degree of uncertainty for the remainder of the quarter.”

“The company’s lower than consensus guidance is based on trends observed to date, along with a continued negative impact on travel trends throughout the remainder of the quarter.”

“While there is, as is typical for Booking, likely some element of conservatism built into management’s guidance, we also think it is worth noting that there is limited visibility around any ongoing impact of the coronavirus and the company’s ability to exceed its guidance mid-points will be largely dependent on the severity of the outbreak.”

What Bloomberg Intelligence Says

“Weakening travel demand will keep pressuring Booking’s room-night and sales growth through 1H, yet we believe the company’s direct-traffic advantage and lead in mobile will have it in a better position vs. Expedia after the coronavirus impact becomes clear. Ebitda decline is likely to be more pronounced in the near term amid less leverage from performance advertising, coupled with revenue-growth declines and spending to build its own payments platform.”

-- Mandeep Singh, BI senior tech analyst

-- Click here for research

Susquehanna (Shyam Patil)

Positive, price target $2,250

“The coronavirus is clearly a near-term headwind that is difficult to handicap both in magnitude and duration.”

“While we expect 1H trends to be softer with extremely limited visibility, we continue to remain positive on BKNG’s secular opportunity to penetrate hotels and alternative accommodations room nights.”

Benchmark (Dan Kurnos)

Hold rating

“We assume there will be a meaningful rebound in 2021, although without any real visibility on the 2020 base, it is hard to judge the order of magnitude or if the entire impact of the coronavirus will be recovered.”

“At current levels, and given the ever transitory nature of these types of events, Booking is probably worth a shot as a low-risk long-term play.”

“However, until we get more clarity on the coronavirus situation, estimates may need to come down more aggressively than anyone suspects.”

SunTrust (Naved Khan)

Buy, price target $2,250

“While the spread of coronavirus will likely impact [near-term] performance, 4Q results also show that the underlying fundamentals remain solid.”

“We’re tweaking our estimates to reflect uncertainty around coronavirus,” which has led to expected pressure on operating margin, average daily rate outlook, and bookings for fiscal year 2020.

Wedbush (James Hardiman)

Neutral, price target $1,750 from $2,000

“2019 finished on a strong note, and 2020 appeared to be off to a strong start before coronavirus took a massive and still-unbounded bite out of earnings power.”

“In many ways, 2020 will prove to be a lost year, and yet we agree with management’s assertion that travel demand will ultimately rebound and that strong travel companies such as BKNG may ultimately emerge from the current crisis even stronger than before.”

To contact the reporter on this story: Kamaron Leach in New York at kleach6@bloomberg.net

To contact the editor responsible for this story: Catherine Larkin at clarkin4@bloomberg.net

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