A pair of well-known travel stocks received opposite reactions from investors after publishing first-quarter reports late Thursday. Booking Holdings jumped higher following its report while its smaller rival Expedia sank in trading Friday.
Booking stock added 3% to close at 3,577.38 on the stock market today after the travel company behind Booking.com, Priceline and Kayak reported earnings and sales that beat expectations.
Meanwhile, Expedia Group also beat expectations for sales and earnings. But gross bookings for the company's platforms — which includes Expedia.com, Hotels.com and Vrbo — came in lower than expected. The firm also lowered its outlook for the rest of the year. Expedia stock sank more than 15% to close at 115.33.
Evercore ISI analyst Mark Mahaney called it a "tale of two cities" for the companies' dueling reports.
"Booking is growing notably faster than Expedia across the board in terms of room nights, bookings, and revenue, while maintaining much higher EBITDA (earnings before interest, taxes, depreciation and amortization) margins," Mahaney wrote to clients Friday. "It is clear to us based on commentary from both companies that Booking is taking share from Vrbo in the North America market."
Booking.com: 'Higher Frequency' Users
In a news release Thursday, Booking Holdings said that it earned an adjusted 20.39 per share on sales of $4.4 billion for the March-ending quarter. On average, analysts projected the company would post adjusted earnings of $13.98 per share on sales of $4.25 billion, according to FactSet.
For the same period a year earlier, Booking Holdings recorded adjusted earnings of $11.60 per share on sales of $3.78 billion.
Meanwhile, the company said that gross travel bookings increased 10% to $43.5 billion. That came in ahead of expectations of $42.15 billion, according to FactSet.
Room nights booked increased 9% year-over-year to 297 million.
Chief Executive Glenn Fogel told Booking stock analysts Thursday that the company "continue(s) to see resiliency in global leisure travel demand, including healthy growth for travel on the books that's scheduled to take place during our peak summer travel season."
He cautioned, however, that those trips are still cancelable. Further, the company is anticipating "some deceleration" in room night growth in the second quarter compared to the Q1 growth.
Still, analysts came away positive on the overall report. "We believe Booking once again returned to gaining share in the U.S. vs. Expedia," RBC analyst Brad Erickson wrote Friday, reiterating an outperform rating for the stock.
Expedia Stock: Down After Earnings
Meanwhile, Expedia late Thursday reported adjusted earnings of 21 cents per share and sales of $2.89 billion, exceeding analyst expectations. But its gross bookings of $30.2 billion, up 3% year over year, came in lower than the $30.45 billion analysts were looking for.
Chief Executive Peter Kern said the company's Vrbo platform, a competitor to Airbnb, provided a drag on gross bookings. Vrbo has recovered "slower than anticipated" from a recent effort to transition it onto a common tech platform with Expedia Group's other offerings, he said in a news release. The firm also lowered its expectations for the rest of the year.
"Given the Vrbo drag and the rate of acceleration in B2C (business-to-consumer) thus far, we are lowering our full year guidance to a range of mid to high single digit top line growth with margins relatively in line versus last year," Kern said in a press release.
Following the report, BofA Securities analyst Justin Post reiterated a neutral rating for Expedia stock and lowered his price target to 147 from 156.
"We now see 2024 full-year outlook as more achievable (our big concern from last quarter), but any reacceleration thesis driven by tech re-platforming seems like a stretch, while we are even more cautious on possible Vrbo recovery vs. innovative competitors," Post wrote Friday.
Mahaney, meanwhile, called it a "disappointing quarter" but reiterated Evercore ISI's outperform rating for Expedia.
"While we believe the company is well positioned for acceleration, this might take a few more quarters to play out," the analyst wrote.
Booking Stock: Technical Ratings
With Friday's gains, Booking shares are up about 4.5% this year compared to a 7.3% gain for the S&P 500. Further, Booking stock is up 36.5% over the past 12 months, outpacing a 24% gain from the S&P 500 in that same period.
Coming into the report, Booking stock had an IBD Composite Rating of 84 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Booking's IBD Relative Strength Rating was 77 out of 99.
Expedia is now down 22% for the year but up 27% over the past 12 months. Coming into the report, Expedia stock had an IBD Composite Rating of 86 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Expedia's IBD Relative Strength Rating was 86 out of 99.
Airbnb, meanwhile, will report first quarter earnings on Wednesday, May 8.
