Yahoo Finance Airbnb stock could skyrocket: analyst
Wall Street is too bearish on home rental platform Airbnb (ABNB), argues Cowen analyst Kevin Kopelman.
The analyst upgraded his rating on the stock Tuesday to Out-perform from Market perform ahead of Airbnb's third quarter earnings release in a few weeks.
"What we found is that we believe the step up of alternative accommodations is going to be a permanent shift. You are not going to see a reversion back away from alternatives toward hotels during the recovery. Instead, you are going to see Airbnb and others in the space continue to show strength in the coming years. That was really the driver behind the upgrade today," Kopelman shared on Yahoo Finance Live interview.
Kopelman is looking for upside in Airbnb's stock to $220 a share, compared to a prior price target of $160.
Airbnb's stock rose 5% to $174.25 on Tuesday. Shares are down 3% over the last three months, compared to a 5% gain for the S&P 500 as traders fret about the recovery travel due to the Delta variant.
But Kopelman's research shows booking trends remain healthy for Airbnb, much healthier in fact than others on the Street believe.
Says Kopelman, "Consensus has Airbnb's bookings slowing to approximately +17% by next year (2022 end), vs. 30% pre-pandemic and almost 100% in 2021 end. We believe this reflects both over-conservatism on COVID recovery and a view that alternative’s [lodging] increase in the lodging mix is temporary. We see this as an unrealistic rate of slowdown given (1) our view that alternative has experienced a permanent step-up in the mix, and (2) the fact that major Airbnb geographies (EMEA, APAC, LatAm) and segments (urban), each representing about 60% of ABNB’s pre-pandemic business, have been significantly depressed throughout 2021 end."
Kopelman adds that hotels should partake in the travel recovery, too. But investing in an alternative player such as Airbnb is the better bet.
"We don't think this is doomsday for hotels by any means. We are pretty bullish on the overall travel recovery and we also think that travelers are going to hotels more. There is an increase in the alternatives in the mix. But hotels will also be growing along with that," Kopelman adds.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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