Shares of Trip.com (NASDAQ: TCOM) were down 10.5% as of 3 p.m. ET Tuesday as the Chinese travel website’s strong quarterly results were overshadowed by a notable analyst downgrade.
On the former, Trip.com’s quarterly revenue nearly doubled from the same year-ago period to 13.75 billion Chinese yuan (U.S. $1.9 billion), translating to adjusted earnings of 7.26 yuan ($1) per American depositary share (ADS). Most analysts were only expecting earnings of 4.93 yuan per share on revenue of 13.6 billion yuan.
Trip.com management noted that its domestic and international businesses each “continued to show robust recovery” during the quarter. Domestic hotel bookings climbed over 90% year over year and rose more than 70% compared to pre-COVID levels for the same period in 2019. Outbound hotel and air reservations also recovered to around 80% of pre-COVID levels, outpacing the broader industry’s recovery rate of 50% as measured by international air passenger volume.
“This shows just how eager travelers are to explore the world,” stated Trip.com Executive Chairman James Liang. “Looking ahead, we will continue our efforts in expanding our global presence and cultivating AI-related initiatives, laying the foundation for continued growth of our company.”
On the heels of Trip.com’s impressive quarterly update, however — and noting shares of Trip.com were up around 33% over the past year leading into this report — analysts at Nomura downgraded the stock to neutral from buy. The firm cited the likelihood that domestic travel growth has peaked in the country given pent-up demand, and it warned that the Chinese travel industry may weaken in the coming quarters as consumers in the country grow more cautious with their spending. Nomura also lowered its per-share price target on Trip.com from $48 to $41, which still marks a solid 25% premium from the stock’s current levels.
It remains to be seen, of course, whether Nomura’s words of caution will prove correct. But skittish Trip.com investors are obviously using the news as an excuse to take some profits off the table today.
10 stocks we like better than Trip.com Group
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Trip.com Group wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of November 20, 2023
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]