Should You Buy Booking Holdings Stock Before Feb. 18?
Key Points
The effects of AI on Booking Holdings and the industry overall have become a significant concern for investors.
A falling stock price has made its valuation increasingly attractive.
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Booking Holdings (NASDAQ: BKNG) has lost 20% of its value since the beginning of the year as of market close Feb. 11, and is down by 27% from its high in June. Investors have been selling thanks to concerns about AI and other challenges.
The company is set to report its reults for the fourth quarter of 2025 on Feb. 18. Investors want to know if they should buy before that report.
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Where Booking Holdings stock stands now
Booking Holdings stock has fallen in recent weeks and now trades in bear market territory as it's down more than 20%. Such drops are often buy signals, particularly before an earnings announcement that could reignite optimism.
Nonetheless, before buying, investors should focus on why a stock might be down. In the case of Booking Holdings, the concerns seem to hinge on the use of AI in travel.
Not surprisingly, Booking Holdings has invested heavily in AI technology. It has developed an in-house AI trip planner and partnered with OpenAI. Also, AI at its kayak.com can help people compare and filter options when planning trips using conversational language.
Still, one can also envision AI changing the nature of travel booking or making companies like Booking Holdings obsolete.
Fortunately, the revenue forecasts do not point to Booking Holdings losing business. Analysts forecast a 17% revenue increase for Q4 and a 22% revenue increase for 2025, well above the 12% growth the company forecast for the year. Even though that revenue growth may slow to an estimated 18% increase in 2026, that still does not represent a loss of business.
Moreover, its valuation has become more attractive. Its price-to-earnings (P/E) ratio of 28 is below the S&P 500 average of 30 and well below its 40 multiple from last summer. Additionally, analysts forecast a forward P/E of 16, which points to significant profit growth.
Indeed, with share prices falling, Booking Holdings stock is close to setting new 52-week lows, and the stock has shown no indications that the declines have stopped.
Is Booking Holdings stock a buy before earnings?
I think Booking Holdings stock is looking more and more like a top stock long-term investors should buy.
How AI will affect the business is a concern, and the stock price is on a downward trend that could accelerate if the earnings report disappoints investors. However, the company is on track to maintain double-digit revenue growth rates.
Given the company's revenue growth, it appears increasingly likely that the sell-off is temporary. At a forward P/E ratio of 16, Booking Holdings stock could rise after the report if investors get good news. Such conditions make it more likely investors will profit whether they buy before or after the report's release.
Should you buy stock in Booking Holdings right now?
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Booking Holdings. The Motley Fool has a disclosure policy.
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