After most of their two-year stay, Americans are planning their summer vacation again, which has had a huge impact on the travel industry. So why don’t investors take part in the trip?
The airline hinted at revival at the time of posting April earningsWhen
Delta Air Lines
(Ticker: DAL) and
American Airlines Group
(AAL) Forecast recovery of profitability throughout 2022. Other industries follow, with many service providers, from online travel agencies to hotels, reporting higher-than-expected revenue for the March quarter. Demand is inch back To the level before the pandemic.
Analysts responded by raising revenue estimates and price targets. However, inventories continue to decline. The
The index has decreased by 20.7% so far,
The index is 7.1% off.
“Someone is wrong,” Yardeni Research observed in a memo. “Both industry analysts are too optimistic about quotes and investors. [are] Too pessimistic about the evaluation. ”
(ABNB).Last week, the short-term rental market First-quarter revenues stunningly strong 70% increaseSecond-quarter sales exceeded Wall Street’s expectations, at $ 1.5 billion. Airbnb reduced its quarterly loss to 3 cents per share, down from $ 1.95 a year ago.
As a result, BofA Securities analysts Justin Post and Deutsche Bank’s Lee Horowitz have increased their earnings and Ebitda, or interest, tax, depreciation, and pre-amortization earnings estimates.
“We are especially encouraged about the comments around Demand after the peak of summer“He wrote. The results supported” our view that the recovery of travel after Covid has a foothold after the summer of 2022, “he said.
But investors didn’t seem to be convinced, and Thursday’s share price fell 8.4%.
The same fate struck
(EXPE) When reporting revenue on Tuesday. Online travel agencies’ first-quarter revenues increased by more than 80% to about $ 2.2 billion. Management predicted a “strong” summer recovery. Still, the company’s share price fell 0.5% on Wednesday, down 23% in the last five days.
Investors appear to be siding with bearish analysts who warn that the resurgence of travel may be exaggerated. For example, Daniel Adam of Loop Capital Markets is concerned that slowing economic growth in markets such as Eastern Europe and Asia will weigh on global recovery.
It may have some truth.
Hilton Worldwide Holdings
(HLT) expects revenue per available room (RevPAR) in 2022 to decline by 9% from 2019 levels, with Asia and Europe following North America.
Revenues reported on Wednesday (MAR) predict that RevPAR in North America will remain almost flat compared to 2019 for the rest of 2022 and will vary widely by region. Both companies reported strong earnings this week, but Thursday’s share prices fell 1% and 2%, respectively.
It didn’t help that Thursday was the worst day for stocks since 2020. This spurred the Federal Reserve’s decision to halve interest rates.
Given the macroeconomic problems facing the industry, investors may be shifting their focus to specific companies, JP Morgan analyst Doug Ammas wrote in a research note Thursday. .. Anmuth in this part was zero, especially for one strain.
The parent company of online travel agency Booking.com, popular with analysts and investors, recorded a 3.2% rise on Thursday, despite a 3.6% drop in the S & P 500.
Bookings exceeded expectations in the first quarter and reported revenue of $ 2.7 billion, more than double the previous year’s. According to analysts, management is implementing a strategic booking initiative to become a one-stop shop for travel, and the company will post the next beat in the next quarter.
For the most recent $ 2,172, stocks will trade at 19.3 times the estimated earnings for the next 12 months. Analysts expect adjusted revenue for the fiscal year to be $ 103.49 per share. This is about the same as 2019 revenue, 126% higher than 2021 revenue.
“We continue to believe that Booking Holdings is one of the best companies in the online travel industry,” writes Ammas. “We believe there is meaningful room for global market share.” He has an overweight rating and a $ 2,900 price target, up about 33%.
It may be time for investors to start selectively booking seats on their long-awaited return.
Write to Sabrina Escobar firstname.lastname@example.org