Airbnb’s (ABNB) upside potential following a conservative second-quarter guidance makes the stock an attractive buying opportunity amid recent underperformance, Wedbush Securities said in a note on Tuesday.
The brokerage upgraded the stock to outperform from neutral and increased its price target to $165 from $160. Shares of Airbnb were up 2% in Tuesday trade.
The stock has declined 8.5% since the vacation rental company’s first-quarter earnings report earlier this month, compared with gains reported by the Nasdaq and Booking Holdings (BKNG), according to Wedbush.
“We think investors should take advantage of this period of relative weakness and see potential upside to near-term estimates following disappointing (second-quarter) guidance that we view as conservative given positive travel data points” so far in the quarter, a group of analysts including Scott Devitt said.
Travel demand appears resilient through the near term, according to Devitt. Recent industry commentary has indicated healthy demand for the summer travel season buoyed by the Paris Olympics and Euro Cup, he said.
Airbnb engagement data quarter-to-date points to web traffic growth of about 6.5% on a year-over-year basis, marking an acceleration from 3.5% in the first quarter, Wedbush said, citing data from Similarweb.
The brokerage lifted its second-quarter revenue forecast to $2.74 billion from a prior view of $2.73 billion and its earnings per share target to $0.88 from $0.84. Analysts on average are modeling for second-quarter revenue of $2.72 billion and GAAP EPS of $0.90 for the ongoing period. Airbnb earlier this month guided for second-quarter revenue between $2.68 billion and $2.74 billion, indicating 8% to 10% year-over-year growth.
The Wedbush estimates for the second-half and full-year were also sweetened. It now sees revenue of $11.27 billion in the ongoing year, up from a prior view of $11.15 billion. Its EPS estimate climbed to $4.34 from $4.19. The consensus is for revenue of $11.17 billion and GAAP EPS of $4.52 in 2024.