Airbnb Price Target Raised to $160 from $130 at RBC Capital

Airbnb, Inc. (NASDAQ:ABNB) has seen its price target raised by RBC Capital to $160 from $130, reflecting the firm's optimism about the company's long-term growth prospects. The analyst, Stephen Ju, raised the price target while maintaining a "Hold" rating on the shares. This move comes after Airbnb reported a mixed Q3 print, with modest upside to near-term fundamentals overshadowed by a weak Q4 margin guide and an investment cycle likely coming in FY25 related to its new and expanding business lines.

Airbnb's Q3 print showed modest upside to near-term fundamentals, but the weak Q4 margin guide and the upcoming investment cycle in FY25 related to its new and expanding business lines have raised concerns about the company's future earnings potential. The analyst tells investors in a research note that while there is modest upside to near-term fundamentals, the investment cycle likely coming in FY25 related to its new and expanding business lines overshadows the positive aspects.

RBC Capital raised its price target on Airbnb to $130 from $120 in October, and the firm's latest move reflects its continued confidence in the company's long-term growth prospects. The analyst's assessment indicates that they see more upside potential in Airbnb's stock price, given the company's growth prospects and the upcoming investment cycle.

Airbnb's stock price has been volatile in recent months, with the company facing challenges related to the broader economic environment, including fears of a looming recession and rising interest rates. These macroeconomic factors have hit consumer discretionary stocks, like Airbnb, particularly hard. However, the company has been posting solid earnings and has reinvested heavily into its platform and operations, positioning itself for future success.

Airbnb's fundamentals remain strong, with more than 70% of companies having a lower mix of growth, profitability, debt, and visibility. The company's valuation in terms of earnings multiples is rather high, with the firm getting paid 35.11 times its estimated earnings per share for the ongoing year. Based on current prices, the company has particularly high valuation levels, and its valuation appears relatively high in relation to the value of its tangible assets.

Airbnb's stock price has fallen by 18.2% from its mid-November high, as quick profit-taking and the emergence of the new Omicron variant have threatened to throw the company's nascent recovery into disarray. However, the company's strong branding and positioning in the US make it well-primed to ride the secular trend towards remote work compared to its peers. The metaverse, which has been the talk of the town lately, is also expected to accelerate the shift towards remote work, further benefiting Airbnb.

In conclusion, RBC Capital's decision to raise Airbnb's price target to $160 from $130 reflects the firm's optimism about the company's long-term growth prospects. Despite near-term challenges, Airbnb's strong fundamentals, branding, and positioning make it well-primed to ride the secular trend towards remote work and benefit from the metaverse's impact on the work-from-anywhere phenomenon. Investors should consider adding Airbnb to their portfolios, but they should be prepared for potential short-term volatility and uncertainty related to the Omicron variant and broader economic conditions.