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Booking Holdings: AI Fears Overshadowed
10 Feb
Summary
- Analyst upgrade signals overlooked operational advantages.
- Company's defensive moat is discounted due to AI fears.
- Current valuation presents a compelling buying opportunity.
Gordon Haskett Research Advisors has upgraded Booking Holdings, citing that the company's operational strengths are being underestimated amid widespread fears surrounding artificial intelligence. The research firm moved the online travel platform's rating from hold to buy, with an analyst price target implying a significant upside potential.
Analyst Robert Mollins articulated that investors have likely overreacted to concerns about AI-driven competitive encroachment. He believes that Booking Holdings' significant operational advantages and strong defensive positioning, coupled with high startup costs and legal risks for potential AI competitors, create a substantial barrier to entry.
The upgrade precedes Booking Holdings' upcoming fourth-quarter earnings report, scheduled for February 18. Mollins anticipates the company could exceed current consensus and guidance for room nights, which is expected to positively impact revenue, EBITDA, and EPS. Additionally, a weaker dollar is predicted to provide further tailwinds through foreign exchange effects.
Mollins views Booking Holdings' current valuation as an attractive entry point for investors. He points to the stock trading at multiples significantly lower than recent historical averages, a narrowing valuation premium compared to peers despite superior margins, and his assessment that AI-related worries are overstated. This confluence of factors, he argues, presents a low-risk, high-reward investment opportunity.
