People’s behavior is shifting out of pandemic mode as the U.S. surpasses 200 million COVID-19 vaccinations, with many beginning to sketch out travel plans as the world begins to reopen.
And while that should be good news for the travel sector as a whole, there are two stocks in the space that look spring-loaded now.
One of the names is Booking Holdings (NASDAQ: BKNG). Booking shares have certainly rebounded over the past year, up nearly 76% in the last twelve months, but the stock hasn’t seen as big of a boost as some of its peers—including Expedia (NASDAQ: EXPE) which is up nearly 208% in the same time frame, and TripAdvisor (NASDAQ: TRIP) and its 190% return over the last year—which is an opportunity for investors.
Jefferies analyst Brent Thill raised his rating on Booking from Hold to Buy in a recent note, boosting his price target on the stock form $2,300 to $2,800 – 19% higher than the price as of this writing.
Thill said in the note that the company’s bookings and revenue growth have reaccelerated to 60% and 40%, respectively, so far this year from declines of 63% and 55% in 2020, and added that the stock’s valuation looks attractive, given its relatively modest performance.
That modest performance is due in part to the fact that Booking is more focused overseas than its peers, with as much as 90% of its bookings and sales coming from outside the U.S. But Thill argues that “those concerns will lift by the second half of 2021 as the rest of the world catches up with the U.S. on vaccination levels and global travel rebounds.”
MKM Partners chief market technician JC O’Hara says Booking looks good from the technical perspective as well.
“A lot of the travel names have basically moved sideways since March,” O’Hara said. “But Booking is breaking out. … If it holds its current levels, it would be a new weekly closing high and that’s very powerful by our work.”
“We are buyers of Booking on the breakout,” O’Hara added.
Joule Financial’s Quint Tatro argued that a rebound in travel is pretty much already priced into stocks in the sector, but added that several names in the sector still have some room left to run.
“Honestly, we think that the stocks are still under appreciated here,” Tatro said. “I think people are really underestimating the incredible pent-up demand that we see.”
One name in particular that Tatro has his eye on is MGM Resorts (NYSE: MGM), which he says has the potential to not only “return to pre-pandemic levels, but go far beyond that” as it returns to profitability.
“Look, these stocks have run. Any dip in here, any news or short-term weakness I think is an opportunity to buy these names,” Tatro added.