CFRA Research upgraded Trip.com Group (TCOM) to Strong Buy in a note Wednesday, citing a robust recovery in the travel industry and the company's strategic expansion efforts.
The research firm maintained its target price of $66 on the stock, which is based on a 2024 price-to-earnings ratio of 20x, slightly above the peer average of 19.7x.
This valuation reflects CFRA's optimism about Trip.com's projected earnings per ADS (EPADS) growth of 54.3%, significantly outpacing the peer mean of 27.8%.
Trip.com's first-half 2024 performance has been a key driver for this upgrade.
CFRA noted that the company's EPADS doubled year-over-year to CNY12.46, supported by a 19-fold increase in the share of affiliates' profit, which followed a net loss in Q1 2023.
Revenue also saw a 20.7% increase, reaching CNY24.7 billion, with strong contributions from various segments: accommodation up by 24%, transportation ticketing by 10%, and other services, particularly packaged tours, by 39%.
CFRA attributes Trip.com's strong performance to the "strong recovery of the domestic and global travel industry," along with the company's strategic expansion into lower-tier cities in China, which has broadened its partnership coverage and strengthened its brand proposition.
This momentum is expected to continue into 2025, bolstered by improved operating leverage through AI-driven platform efficiency and higher-margin outbound sales.
Reflecting these positive trends, CFRA has raised its 2024/2025 EPADS estimates to CNY23.44 and CNY26.95, up from previous estimates of CNY20.50 and CNY24.62, respectively. This outlook underlines CFRA's confidence in Trip.com's ability to sustain its growth trajectory in the recovering travel sector.