Reiterate O'weight - slowdown not structural
We reiterate our Overweight recommendation on Booking Holdings, viewing concerns of a permanent structural slowdown in the business as overdone and the growing prospect of sustainable margin expansion being largely overlooked. Furthermore, Q4 guidance should be a positive catalyst so we recommend taking advantage of the current weakness, with our YE18 PT of $2,200 (~20% annualised return) requiring a ~21x FY19 PE, reasonable given the anticipated mid-teens '18-20 EPS CAGR.Booking Holdings provides travel and restaurant online reservation and related services. The company's brands include: Booking.com and Rentalcars.com, in which Booking.com provides booking online accommodation reservations, based on room nights booked, and Rentalcars.com provides online rental car reservation services; KAYAK, which provides an online price comparison service; Priceline, which provides consumers hotel, rental car and airline ticket reservation services, and vacation packages and cruises; Agoda, which is an online accommodation reservation service; and OpenTable, which provides online restaurant reservation services to consumers and reservation management services to restaurants.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
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