On Tuesday, Citi updated its assessment of Trip.com Group Limited (NASDAQ: TCOM) shares, raising the price target to $66 up from the previous $55 while maintaining a Buy rating on the stock. The adjustment comes in light of Trip.com's first-quarter non-GAAP Operating Profit Margin (OPM) which stood at 31.6%.
Citi anticipates that Trip.com will continue to exhibit a sustainable margin trend due to effective cost control measures, despite potential increases in marketing expenditures aimed at expanding market share.
Trip.com's domestic revenue year-over-year growth is expected to decelerate in the second and third quarters of 2024 due to tougher comparisons. However, the momentum is predicted to resume in the fourth quarter of 2024.
The outbound segment of the business may see close to a 60% year-over-year revenue growth, driven by robust volume growth that could offset the impact of lower flight ticket prices. Additionally, the strong performance of Trip.com is expected to persist.
The financial contributions from associates such as MakeMyTrip are also anticipated to continue bolstering Trip.com's bottom line. Based on these factors, Citi has increased its earnings estimates for 2024, 2025, and 2026 by 7%, 6%, and 4% respectively.
The new price target of $66 reflects an optimistic view of the company's solid industry position, favorable margin trajectory, and the potential for further success from Trip.com's operations.
InvestingPro Insights
As Trip.com Group Limited (NASDAQ: TCOM) garners attention with Citi's upgraded price target, real-time data and insights from InvestingPro provide additional context for investors. With a market capitalization of $36.89 billion, Trip.com's financial health is underscored by a robust gross profit margin of 81.75% over the last twelve months as of Q4 2023. This figure aligns with Citi's note on the company's effective cost control measures and sustainable margin trends.
InvestingPro Tips reveal that Trip.com holds more cash than debt on its balance sheet, which is a reassuring sign of financial stability. Moreover, the company has been able to raise its dividend for four consecutive years, reflecting confidence in its financial position and commitment to shareholder returns. These aspects may resonate with investors looking for companies with sound financial strategies and consistent performance.
For those interested in deeper analysis, InvestingPro offers additional insights, including the fact that Trip.com is trading at a high revenue valuation multiple and is currently near its 52-week high. With analysts predicting profitability for the year and a strong return over the last year, Trip.com's stock trajectory seems to be on an upward trend. To access more exclusive InvestingPro Tips for Trip.com, visit https://www.investing.com/pro/TCOM and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 14 additional InvestingPro Tips available that could further inform investment decisions.
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