On Thursday, BofA Securities updated its outlook on Airbnb Inc. (NASDAQ:ABNB), increasing the price target to $168 from the previous $155 while maintaining a Neutral stance on the company's shares. This adjustment reflects a more optimistic view of the company's potential for growth in room nights and earnings before interest, taxes, depreciation, and amortization (EBITDA).
The analysis by BofA Securities highlighted that Airbnb experienced an acceleration in room nights growth in February, based on data from AirDNA. This trend suggests that bookings for Alternative Accommodation (AA) have picked up after a slow start in January, making a first-quarter performance that meets or exceeds expectations more probable. Additionally, an increase in supply was noted as a positive development, with the market generally optimistic about Airbnb's opportunities to expand host and guest services.
Despite these positive indicators, BofA Securities remains cautious, acknowledging the frequent changes in AirDNA's estimate methodology. The firm also anticipates challenging year-over-year comparisons in Europe for 2024, with the possibility of growth rates aligning more closely with those in the United States.
The revised price target of $168 is based on a higher valuation multiple of 22 times the projected 2025 EBITDA, compared to the 20 times multiple used previously. This change is justified by the potential upside in both room nights and margin. Nonetheless, the Neutral rating was reiterated, with the current valuation of the company's shares being a factor in this decision.
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