'Pent-Up Demand Driving Strength': Airbnb Analysts React To Q1 Earnings Beat

Airbnb Inc (NASDAQ: ABNB) shares traded higher by 4.9% on Wednesday after the company reported big first-quarter earnings growth and said it expects a sharp rebound in summer travel in 2022 as pandemic headwinds abate.

On Tuesday, Airbnb reported a first-quarter adjusted EPS loss of 3 cents, well ahead of consensus analyst estimates of a 29-cent loss. First quarter revenue was $1.51 billion, beating analyst estimates of $1.45 billion. Revenue was up 70% from a year ago.

Airbnb reported 102.1 million nights and experiences booked in the first quarter, surpassing pre-pandemic levels in 2019 and beating analyst estimates of 100.8 million. As of the end of April, Airbnb had 30% more nights booked for the upcoming summer travel season than at the same time in 2019.

Looking ahead, Airbnb guided for second-quarter revenue of between $2.03 billion and $2.13 billion, exceeding consensus estimates of $1.96 billion.

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Full Valuation: Bank of America analyst Justin Post said Airbnb reported strong first-quarter numbers and issued solid guidance, but the stock's valuation remains elevated.

"Our caution on ADR pressure due to Intl/Urban room night mix shift has not materialized in 2022, however, we remain cautious on valuation with stock at 10x our 2023 rev. est. (using AH price of $155) and the sector seeing multiple compression," Post wrote.

RBC Capital Markets analyst Brad Erickson said Airbnb is demonstrating differentiated growth and profitability relative to peers, but the stock still may have limited upside.

"We believe investors are largely already contemplating this both near, medium and long term which leaves little room for multiple expansion from current levels," Erickson wrote.

Raymond James analyst Aaron Kessler said Airbnb has strong bookings momentum and EBITDA leverage.

"While we have a positive fundamental outlook, we believe shares are fairly valued at current levels (~15x 2022 EV/ Gross Profit)," Kessler wrote.

"I'm Flexible" Impact: Wells Fargo analyst Brian Fitzgerald said Airbnb guests have become more flexible with their travel plans, and that's ok.

"ABNB reported a strong 1Q and issued constructive guidance and commentary pointing to continued strength in key pandemic power alleys (domestic, non-urban, long-term stays) which have seen the company through COVID-19, a broadening recovery (urban and cross-border gathering steam), and solid supply growth, which we view as adequate to support ongoing, robust demand, particularly given increased guest exibility—"I'm Flexible" search has now been used 2B+ times since launch—which allows ABNB to more effectively direct and distribute that demand across the supply base," Fitzgerald wrote.

Needham analyst Bernie McTernan said Airbnb is benefitting from the diversity and volume of their supply, as well as its innovative "I'm Flexible" option.

"While demand is recovering in ABNB's old bread and butter (urban, cross border and short-term stays), the new use cases on the platform continue to attract strong demand (domestic, nonurban and longer stays)," McTernan wrote.

KeyBanc analyst Justin Patterson noted "pent-up demand driving strength" in Airbnb bookings.

"The I'm Flexible search feature has been used over 2B times, driving demand where Airbnb has supply," Patterson wrote

Ratings And Price Targets:

• Bank of America has a Neutral rating and $188 target.
• RBC has a Sector Perform rating and $175 target.
• Wells Fargo has an Overweight rating and $250 target.
• Raymond James has a Market Perform rating.
• Needham has a Buy rating and $220 target.
• KeyBanc has an Overweight rating and $195 target.

Photo: Courtesy of airbnb.com