: Airbnb expected to solidify its position as travel business rebounds

As travel continued to rebound in the third quarter, Airbnb Inc. is believed to have bolstered its lead in the growing market of alternative lodging.

Cowen analysts, who say “the brand is synonymous with the category,” estimate that Airbnb

commands more than 50% of alternative-lodging bookings such as home and apartment rentals. They also wrote in a note to investors that they estimate the alternative category has risen from comprising 24% of global lodging dollars pre-pandemic to 33% today.

There’s plenty more optimism about the category, such as from JMP Securities, which noted that 19% of travelers stayed in a “vacation rental” for the first time during the pandemic: “As travel demand normalizes, we expect Airbnb, Vrbo (Expedia

), and alternative accommodations broadly to be long-term beneficiaries of COVID-19.”

See also: Is that Airbnb too expensive? CEO plans ‘systematic update on pricing’ as travel recovers

Early indications of a travel recovery from the coronavirus pandemic include earnings results from travel-search platform Trivago
which beat expectations Monday on the strength of travel in Europe and the Americas but cautioned that the travel recovery flattened in October compared with the summer months because of remaining restrictions.

Naved Khan, analyst for Truist Securities, said in a note to investors Monday that he sees the “European travel recovery in 3Q a positive for Airbnb, given that the company generated ~40% of its revenue from EMEA in 2019 (with Europe being the biggest component, we believe).”

Airbnb is scheduled to report third-quarter earnings Thursday after the stock markets close.

What to expect

Earnings: Analysts surveyed by FactSet on average expect Airbnb to post net income of 72 cents a share, or $477 million. The average expectation of analysts, hedge-fund managers, executives and more as gathered by Estimize is 75 cents a share.

Revenue: Analysts on average expect revenue of $2.06 billion, compared with $1.34 billion in the year-ago quarter, according to FactSet. Estimize is guiding for $2.07 billion.

Stock movement: Airbnb’s shares have risen all three times after it reported earnings since it went public last December. Airbnb stock is up nearly 18% so far this year through Monday’s session, while the S&P 500 index 

has gained more than 22%.

What analysts are saying

“Airbnb’s growth in 2021 is arguably more impressive given we believe two of its strongest categories, international and urban markets, are operating below 2019 levels,” KeyBanc analyst Justin Patterson wrote in a note to investors. “As vaccination rates increase, we expect international and urban strength could provide incremental growth for Airbnb.”

Previous earnings coverage: Airbnb outperforms pre-pandemic results, but forecast suggests it may not last

In Cowen’s note to investors, analyst Kevin Kopelman wrote that he viewed the consensus that Airbnb’s bookings will slow to about 17% growth in 2022 as “an unrealistic rate of slowdown,” because “alternative [lodging] has experienced a permanent step-up in the mix.”

He also said there’s plenty of room for Airbnb bookings to grow, since “major Airbnb geographies [Europe, the Middle East and Africa; Asia Pacific and Latin America] and segments (urban), each representing about 60% of ABNB’s pre-pandemic business, have been significantly depressed throughout 21E.”

Out of 36 analysts surveyed by FactSet, 17 have a buy rating on Airbnb stock, while 14 have a hold rating, three say sell and two rate the stock at overweight. The average price target as of Monday was $178.67. 

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