What happened

Shares of the vacation rental platform Airbnb (ABNB -1.02%) tumbled 4.6% as of 1:35 p.m. ET on Thursday after not one but two separate analysts decided to cut their price targets on the stock.

First Citigroup cut its estimated valuation of Airbnb from $200 to $160 today. Then, less than an hour later, Truist cut its price target from $160 to just $120 a share.

So what

Granted, Airbnb shares only cost about $91 and change right now, so even a $120 price target implies more than 31% upside in the shares. Nevertheless, Truist is only rating Airbnb a hold on worries that second-quarter earnings -- which are due out on Aug. 10 -- might disappoint, as a strong U.S. dollar means that profits earned outside the U.S. will be worth less when translated into U.S. dollars for incorporation into the income statement. Further out, the analysts warns that if a recession is coming, this could hurt demand for travel, adding future sales weakness to worries about Airbnb's profits.  

Citigroup cut its price target on Airbnb, too, with its analyst a bit less optimistic about the stock's chances. As The Fly reports today, like Truist, Citi sees the potential for both currency exchange rates and an economic slowdown hurting Airbnb's business. However, with its price target of $160 implying the stock is more than 40% undervalued, Citi thinks long-term investors can still make a tidy profit by sitting tight and riding out the volatility.  

Now what

I have to admit I'm more inclined to side with Citi than with Truist on this one.

Consider: After a long pandemic, Airbnb finally turned profitable again in last year's second half, earning some $888 million in profits, according to data from S&P Global Market Intelligence. The company is even more profitable when valued on its free cash flow (FCF), which stretched to $2.8 billion generated over the past 12 months.

At a current enterprise value of just $54 billion, this means that probably the leading name in travel today is selling for an enterprise value to FCF ratio of less than 20 -- 19.3 to be exact. And whatever may happen in the near term, analysts are still forecasting that Airbnb will grow its profits at nearly 19% annually over the next five years.

I don't know about you, but to me that looks very close to fairly priced. In fact, paying 19.3 times FCF for a 19%-ish grower could even be a bargain price.