Goldman Sachs: Booking Holdings (BKNG.US) Q1'26 Earnings Review: Middle East Exposure Impacts Forward Commentary; Maintain Neutral
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Booking Holdings reported first-quarter 2026 results where gross bookings, room nights, and revenue were negatively impacted by geopolitical tensions in the Middle East. This disruption led to increased cancellations, slower forward booking trends, and marketing deleverage, effects that management expects to persist through the end of June. Despite these headwinds, the US and Asia segments demonstrated resilience, delivering low-double-digit and high-single-digit year-over-year growth in room nights, respectively.
Q1 adjusted EBITDA of $1.29 billion exceeded both Goldman Sachs and FactSet estimates. However, the disappointing Q2 guidance and a reduction in the full-year adjusted EBITDA margin expansion outlook—from roughly 50 basis points to 0-25 basis points—driven by incremental long-term investments, weighed on the shares. Management remains focused on scaling connected trips, alternative accommodations, and AI integration. Capital returns remain robust, with $3.6 billion in buybacks during Q4 and approximately $18.2 billion remaining under authorization.
Factoring in the Q2 guidance shortfall and lower margin expectations, Goldman Sachs trimmed its estimates and reduced its 12-month target price from $226 to $223, based on a blended EV/GAAP EBITDA and EV/FCF-SBC methodology. The firm maintains a Neutral rating on Booking Holdings (BKNG.US), noting potential upside of 28.6% from the current price of $173.38.