Airbnb is poised for an earnings surge, KeyBanc analyst Justin Patterson predicts in a research note Tuesday.
Patterson lifted his rating on Airbnb (ticker: ABNB) to Overweight from Sector Weight, setting a price target for the short-term lodging rentals business of $180, about 19% above yesterday’s close. The analyst argues the stock is headed for a period of “material” earnings estimate revisions—and he believes June-quarter results will be well above current Street estimates.
The company will report results on Aug. 12.
Patterson raised his financial forecasts for the second quarter, the full year, and next year. For the June quarter, he’s now projecting revenue of $1.34 billion, above the consensus forecast of $1.25 billion, with earnings before interest, taxes, depreciation, and amortization (Ebitda) of $136 million, likewise well above the Street consensus at $38 billion.
For the full year, he sees revenue of $5.8 billion and Ebitda of $1.1 billion (consensus is $5.5 billion in revenue and $738 million for Ebitda), and for 2022, he projects revenue of $7.7 billion and Ebitda of $1.7 billion, an even bigger gap above consensus, which stands at $7 billion and $1.2 billion, respectively.
In Patterson’s view, the company’s “unit economics” advantages are going to begin to emerge more clearly in reported results. He notes that 90% of Airbnb’s traffic comes direct to the site, with the company spending much less than peers on digital advertising. Airbnb CEO Brian Chesky addresses that question in a recent interview with Barron’s, noting that a recent recovery in the business from pandemic lows came with almost zero ad spending.
“Not only does this make Airbnb more insulated from digital ad inflation, it also provides more room for margin expansion when revenue accelerates,” the analyst writes. “Both of these conditions are present today, which we believe leads to significant revenue and Ebitda revision potential versus peers.”