Rosenblatt Sees Booking (BKNG) as the Best-Positioned Online Travel Agency Despite Challenges

Booking Holdings Inc. (BKNG) is seen as the most advantageous online travel agency, despite facing challenges, according to Rosenblatt. The stock has underperformed this year, with a 6.66% decline year-to-date, while the S&P 500 has risen 11.65%. However, Rosenblatt initiated coverage on August 31, giving BKNG a Buy rating and a price target of $245.

The firm believes BKNG remains the best-positioned online travel agency globally, citing its unmatched scale, diversification, solid liquidity and free cash flow conversion, and a proven track record of executing strategic initiatives. Concerns that AI could disrupt BKNG's business have been overestimated and are already reflected in the stock.

The company's Connected Trip strategy is viewed as both a growth source and a structural AI moat. BKNG has a diverse and fragmented supply base, which is harder for AI agents to aggregate compared to concentrated chain inventory. The firm expects greater savings from its Transformation Program, projected to reach approximately $650 million annually by the end of 2027.

However, BKNG continues to face headwinds, such as geopolitical uncertainty and inflationary pressures affecting travel demand. The company anticipates gross bookings growth between 4% and 6% in the third quarter, with full-year 2026 growth expected in the high single digits. Elevated flight ticket prices, reduced flight capacity on certain routes, and softer long-haul international travel demand are expected to persist through the third quarter.

Hedge fund interest in BKNG has slightly weakened, with 92 hedge funds holding positions in the stock as of August 14, down from 95 funds in the first quarter. Despite a forward earnings multiple of 19.49, BKNG's trailing price-to-earnings ratio of 22.50 may be seen as reasonable. While the stock may not appear cheap, its growth initiatives and cost savings could potentially outweigh near-term pressures facing global travel.