The Consensus EPS Estimates For Booking Holdings Inc. (NASDAQ:BKNG) Just Fell A Lot
Today is shaping up negative for Booking Holdings Inc. (NASDAQ:BKNG) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the latest downgrade, the current consensus, from the 28 analysts covering Booking Holdings, is for revenues of US$7.0b in 2020, which would reflect a concerning 52% reduction in Booking Holdings' sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$13.00 per share in 2020. Previously, the analysts had been modelling revenues of US$8.8b and earnings per share (EPS) of US$28.40 in 2020. There looks to have been a major change in sentiment regarding Booking Holdings' prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.
View our latest analysis for Booking Holdings
The consensus price target was broadly unchanged at US$1,644, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Booking Holdings at US$2,250 per share, while the most bearish prices it at US$1,030. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 52%, a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 17% annually for the foreseeable future. It's pretty clear that Booking Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Booking Holdings dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Booking Holdings' revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Booking Holdings after the downgrade.
Worse, Booking Holdings is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. You can learn more about our debt analysis for free on our platform here.
We also provide an overview of the Booking Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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