Shares of Booking Holdings (BKNG 4.58%) were surging today, up roughly 5.2% as of 2:08 p.m. ET. Curiously, there wasn’t any company-specific news today. But recent earnings reports and commentary from other bellwethers in the travel space, notably Alphabet (GOOG -3.75%) (GOOGL -3.67%) and American Express (AXP -0.57%), seemed to indicate incredibly strong current demand for travel.
Therefore, investors might be buying Booking ahead of its earnings report on May 4, anticipating a better-than-expected result and outlook.
Last night, Alphabet reported earnings that showed strong Google search growth, albeit with lagging YouTube growth (hence, why the stock is down today). Yet on the conference call with analysts, Alphabet’s chief business officer Philipp Schindler pointed to very strong demand for travel:
People are seemingly back on the move — whether they’re searching for planes, passports, or their next vacation destination, Q1 travel searches were above Q1 ’19 pre-pandemic levels. Query growth in categories like “beaches and islands” were up 27% vs. 2019, while “vacation rentals” rose 37%. Compared to last year, global searches for “passport online” jumped 80%, while searches for “travel insurance” surged 2X.
That bodes quite well for pent-up demand for travel as the omicron variant of the coronavirus fades here in the U.S. Alphabet’s positive comments followed a similarly strong report and outlook from American Express last week. AmEx pointed to travel and entertainment (T&E) spending growing fast through the first quarter, with March T&E spending already back to 99% of 2019 levels and trending upward.
Likely, a combination of Alphabet’s strong travel outlook and a rising Nasdaq Composite today fed outsize gains for Booking.
This positive travel outlook should be good for all travel-related stocks and not just Booking. Yet it is the largest pure-play online travel advisor, so it should reap its fair share of gains. The stock is still 14% below its year-to-date highs seen back in February, before the Russian invasion of Ukraine. So there could still be some upside to come.
Booking does trade around 25 times this year’s earnings estimates, so the stock isn’t exactly cheap in a rising-rate environment. That being said, there is quite a wide range within the current analysts’ estimates on earnings per share, ranging from $75 to $108 this year, and rising to a range of $99.60 to $144 in 2023.
At least today, it appears that bullish commentary from Alphabet and AmEx are fueling optimism that Booking Holdings could come in toward the high end of that range. Investors will find out how well the company is recovering next Wednesday when it reports earnings.