What happened
Travel mega-website operator Booking Holdings (BKNG -0.47%) booked a 5.1% pop in share price Wednesday, as of 2:25 p.m. ET.
If you own shares of the company, you can thank the friendly analysts at Evercore ISI for that.
Image source: Getty Images.
So what
This morning, Evercore upgraded Booking Holdings stock to outperform, reports StreetInsider.com, and raised its price target on Booking stock by $400 to $2,900 a share.
"We have raised our BKNG estimates primarily to reflect a more rapid leisure travel recovery," explained the analyst. Booking Holdings boasts "High Quality assets" and is one of a handful of "clear recovery plays" as leisure travel resumes post-coronavirus. At the same time, the company's exposure to the Russia/Ukraine market "is also very limited," notes the analyst, such that worries that have depressed other leisure stocks these past few weeks should pass Booking by.
Worst case, any travelers who are leery of traveling to Russia or Ukraine can simply travel somewhere else instead -- because vacations are, after all, "location fungible."
Now what
Now as regards valuation, Evercore notes that Booking Holdings stock currently trades for a modest 18 times its anticipated earnings in 2023. That's a "healthy, attractive discount" to the stock's intrinsic value, estimates the analyst. Indeed, if you agree with Evercore that Booking should be able to grow earnings at 30% to 35% annually as revenues revive and profits are turbocharged by margin expansion, this works out to an attractive PEG ratio of no more than 0.6.
When you consider that value investors generally consider anything under a 1.0 PEG ratio to be a bargain, it's hard to argue with Evercore's recommendation to buy Booking Holdings stock today.
