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It’s time to look elsewhere in the travel sector after Booking Holdings ‘ recent gains, according to Bank of America. Analyst Justin Post downgraded the stock to neutral from buy, saying there’s less upside after Booking’s recent outperformance. Instead, he favors Expedia because its stock could rise if it’s able to improve its market share. “Our thesis on Asia recovery seems to be playing out as a positive driver for Booking, and China outbound could provide an additional Summer boost,” Post wrote Wednesday. BKNG 6M mountain It’s been a fairly steady climb for Booking since hitting a low in October. “However, Booking stock has far outperformed peers (+3% TTM [trailing twelve months] vs NASDAQ -16%), comps get tougher in 2Q, and we downgrade to Neutral from Buy as we see less valuation upside looking out to our now above-Street 2024 ests. (adjusted for FX),” Post added. Booking Holdings shares are up more than 19% this year as investors expect continued travel recovery both in the West, and especially in Asia as China reopens. The travel stock outperformed the S & P 500 , which rose more than 4% over the same time period. The analyst’s $2,700 price target, raised from $2,250, implies about 12% upside from Tuesday’s closing price for the firm. Shares of Booking are down more than 1% in trading Wednesday. Additionally, the analyst expects recent declines in the dollar to benefit travel bookings across the industry. He lifted his booking estimates for Booking, Expedia and Airbnb above Street consensus. As for Expedia, the stock is up more than 31% this year, although shares were basically flat in Wednesday trading. Post reiterates it at a buy, saying he anticipates less risk of a “severe travel recession.” EXPE 6M mountain Expedia could see more gains ahead in 2023, Bank of America says. The analyst also expects Expedia’s free cash flow to improve and allow for buybacks as its market share stablizes. The company has focused on building customer loyalty with its app and Post expects that will help it going forward. —CNBC’s Michael Bloom contributed to this report.
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