Leisure Stocks - The World Is About To Go On Vacation
With international travel restrictions lifting around the globe, demand for travel and leisure services is on the rise. Today we’re highlighting two stocks analysts are upgrading that we see moving higher. In our view, travel and leisure may be one of the hottest sectors over the next year and there are still double-digit gains to be made by investors.
1. Expedia Is Booking Profits
Shares of Expedia (NASDAQ:EXPE) began moving higher last week after the company reported earnings. The reopening demand was so strong it drove revenue up nearly 100% from last year and beat the consensus estimate by nearly 900 basis points. Earnings were also strong, coming in nearly double the consensus estimates on reopening leverage. The company says with positive signs early in Q4 and reopenings underway in key destinations, it is confident in continued recovery. All segments produced high-double-digit growth with notable strength in B2B and Trivago which both grew more than 100% YOY.
The Marketbeat.com analysts consensus shows the sell-side community is still on the fence with Expedia but the trends are improving. The consensus rating is a Hold leaning toward Buy with a consensus price target of $182. The $182 consensus target assumes the stock is fairly valued with the recent surge in share prices, but we think this is only the beginning of a much larger movement. The high price target of $238 implies about 30% of upside in the stock which is more in line with the technical outlook.
On a technical basis, the stock is breaking out to new highs after staging a $50 rally within a consolidation zone. In our view, the stock has as much as $50 in upside ahead of it and could see more if the following quarter’s results are equally good. The indicators are equally bullish. MACD and stochastic are firing what we consider to be a strong, textbook, trend-following entry signal.
2. Airbnb Is Uniquely Positioned For Post-COVID Travel
Airbnb (NASDAQ:ABNB) shares started surging last week after it reported Q3 results and provided a positive outlook. The company delivered revenue of $2.24 billion, or up 67% from last year, to set a company record. Margins and earnings are also a company record and execs see travel demand staying strong well into next year. Looking forward, the company expects Q4 bookings to “significantly outperform” the prior year and is raising guidance. Execs are expecting revenue in the range of $1.39 to $1.48 billion which will be good for growth near the Q3 rate and possibly faster.
The analysts are still on the fence with Airbnb as well, but the trends are changing here too. The consensus rating is a Hold leaning toward Buy with both the number of analysts growing and the price target moving higher. The Marketbeat.com consensus price target is up more than 1000 basis points in the last month and will likely go higher in the near, mid and long-term. No less than 13 sell-side analysts have boosted their target since the earnings were released and most are well above the broad consensus. The high price target of $250 assumes about 35% of upside in this stock. Technically speaking, a break to new highs would open the door to the $260 to $280 range.
