On Friday, Evercore ISI updated its price target for Airbnb Inc . (NASDAQ:ABNB) to $155.00, up from the previous target of $125.34, while maintaining an In-Line rating for the company's stock. The revision follows Airbnb's recent earnings report, which the firm described as a modest beat with mixed results.
According to the firm, Airbnb's third-quarter performance showed bookings, revenue, EBITDA, and room nights that were all slightly above expectations. However, the outlook for the fourth quarter was mixed, with the forecasted EBITDA falling significantly below market expectations. This is attributed to Airbnb's increased spending on marketing and product development as the company aims to achieve double-digit growth rates.
The analyst noted that demand for Airbnb increased each month during the quarter, and total room nights booked reached approximately 123 million. This surge was partly due to a rise in app-based bookings and a strong recovery in European travel following the Olympics. Despite these positive trends, the firm indicated a preference for other companies in the sector, like Expedia (NASDAQ:EXPE) Group Inc. and Booking Holdings (NASDAQ:BKNG) Inc., mainly due to valuation considerations.
Evercore ISI also mentioned Airbnb's Co-Hosting initiative as an interesting development with potential impacts, expressing a curiosity about its future influence on revenue elasticity. The firm stated that evidence of this impact is anticipated by mid-2025. In the meantime, Evercore ISI has reiterated its In-Line rating for Airbnb and has concluded its Underperform call on the Travelers (NYSE:TRV)' Advantage Program (TAP).
In other recent news, Airbnb's third-quarter financial performance revealed a slight surpassing of revenue estimates at $3.73 billion, yet fell short of profit expectations with earnings per share reported at $2.13. This is attributed to increased marketing expenses, which led to a 27.5% rise in costs. Goldman Sachs, in response to Airbnb's recent financial performance, has raised its price target for the company to $107 from the previous $103, while maintaining a Sell rating on the company's shares.
The company's strategic initiatives, such as the introduction of the Co-Host Network and the expansion into new markets, have been positively received by several analyst firms including Citi, KeyBanc Capital Markets, and B.Riley. However, potential regulatory pushback due to a surge in short-term rentals and tax incentives in Greece encouraging homeowners to shift from short-term to long-term rentals could affect Airbnb's operations.
Looking ahead, Airbnb anticipates revenue for the fourth quarter to be between $2.39 billion and $2.44 billion, representing an 8% to 10% year-over-year increase. The company also expects a modest rise in the average daily rate, which stood at $164 in the third quarter. Airbnb is preparing for more challenging year-over-year comparisons, while projecting an acceleration in nights booked for the fourth quarter. These are recent developments that may shape Airbnb's future operations and performance.
InvestingPro Insights
Airbnb's financial metrics and recent performance align with Evercore ISI's analysis, offering additional context to the company's position. According to InvestingPro data, Airbnb boasts a market capitalization of $93.2 billion and an impressive gross profit margin of 83.07% for the last twelve months as of Q3 2024, underscoring the company's operational efficiency mentioned in the article.
The company's revenue growth of 12.9% over the same period supports Evercore's observation of increased demand and bookings. However, an InvestingPro Tip suggests that Airbnb's net income is expected to drop this year, which may explain the firm's mixed outlook and the forecasted EBITDA falling below market expectations.
Another relevant InvestingPro Tip indicates that Airbnb holds more cash than debt on its balance sheet, potentially providing the financial flexibility needed for the increased spending on marketing and product development mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Airbnb, providing a deeper understanding of the company's financial health and market position.
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