Booking rating upgraded to Buy, analysts say it will continue to be a "key driver of the travel industry"

Investing.com - Booking Holdings stock was upgraded by Morgan Stanley on Tuesday, with the firm raising its rating from Market Perform to Overweight and setting a target price of $5,500, down from the previous $6,150.

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Morgan Stanley analyst Brian Nowak said the firm believes Booking “will continue to be a key driver in the travel industry even as intelligent agent tools continue to develop,” citing its “ability to own customers, capture strong traveler data, and leverage that data to drive high-margin direct business.”

Morgan Stanley now expects that despite the rise of generative AI tools, online travel agencies including Booking will continue to play a core role in the long-term structure of the sector.

The firm emphasized, “Intelligent agents also require BKNG’s leading inventory resources, which give BKNG bargaining power.”

When explaining the reasons for the upgrade, Nowak said, “We believe BKNG and online travel agencies will be as important in the era of intelligent agents as they have been over the past twenty years.”

The analyst pointed out that early intelligent agent travel products “simply transferred traffic to online travel agency apps/websites for purchase, rather than checking out directly within the agent,” and some channels “prefer not to be merchants of transaction records.”

Morgan Stanley added that, given the industry’s potential similarity to paid search, where online travel agencies “win traffic and transactions through bidding ads… and then work to convert that traffic into future direct customers,” the firm believes Booking is well-positioned.

The firm noted that Booking has “more than 20 years of leading execution history” and expects “this performance to continue in the future.”

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