Gordon Haskett Research Advisors believes that Booking Holdings ‘ operational advantages are being overlooked amid heightened AI fears. The research firm upgraded the online travel platform to a buy rating from hold. Analyst Robert Mollins’ price target of $5,440 implies an upside of 28%. Shares of Booking Holdings have slipped 14% over the past 12 months. The stock is down 21% on the year. BKNG 1Y mountain BKNG 1Y chart Following the upgrade, Mollins called Booking Holdings the firm’s “highest conviction idea.” The analyst believes that investors are discounting the company’s defensive moat on a backdrop of artificial intelligence fears. “We believe investors have overreacted to AI-driven competitive encroachment concerns and discounted key aspects of BKNG’s operational advantages and defensive positioning,” he wrote. “BKNG’s advantages, combined with high startup costs and legal risks associated with building a competing online travel platform, should serve as a deterrent to AI companies directly competing.” Mollins’ upgrade comes before Booking Holdings reports its fourth-quarter earnings on Feb. 18. The analyst believes that the company could report upside in its room nights versus current consensus and guidance. “Our expectation for room nights upside should flow through to outperformance across revenue, EBITDA, and EPS,” he added. The analyst also believes that dollar weakness will continue to drive foreign exchange-induced tailwinds. Mollins also believes that the company’s current valuation offers investors a compelling buying opportunity here. “Overall, with (1) BKNG trading well below the valuation multiples seen just weeks ago and over the prior two years, (2) the valuation premium relative to peers narrowing despite significantly stronger margins, and (3) our view that AI worries are overblown, we see a low-risk, high-reward opportunity that warrants action,” he wrote.
