Airbnb and Expedia stand out in Needham's check of vacation rental demand (updated)
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Needham called out strong trends for Airbnb (NASDAQ:ABNB) and other online travel companies on Tuesday as part of its latest supply tracker update.
Analyst Bernie McTernan said the firm's 6th Supply Tracker showed strong supply trends in the U.S., with Expedia's (NASDAQ:EXPE) VRBO having its best month-over-month growth this year in June. Vacasa (NASDAQ:VCSA) had slight month-over-month growth for the first time in 2023, while Evolve's supply was updated to show 2.3% growth for the month.
"VRBO supply continues to grow. In June, VRBO had its best MoM growth YTD, growing +2.4% and has grown +11% YTD. This YTD growth compares to Evolve at +12% and VCSA -2% and the broader US STR market, a proxy for ABNB, at +13% through May. We view continued supply growth as a positive for the long-term health of the marketplaces."
McTernan and his team think Airbnb (ABNB) is growing even faster, with other use cases like urban areas supporting higher growth.
Needham boosted estimates on ABNB and hiked the price target to $160 on higher ADRs following a recent expert call suggesting improving trends in June and strong TSA passenger data. Notably, the firm now assumes a slight year-over-year margin expansion in 2023. Needham's $160 price target is based on a ~25x EV/adjusted EBITDA multiple on the 2024 estimate, which implies a 9X EV/sales multiple on the 2024 estimate. Needham sees the return of travel combining with ABNB's high-quality, unique marketplace leading to share gains. 
Shares of Airbnb (ABNB) rose 2.44% in afternoon trading on Tuesday. The online travel stock is up 59% on a year-to-date basis and is approaching its 52-week high of $144.63. Expedia (EXPE) gained 2.13% and is now 34% higher for the year. Vacasa (VCSA) shot up 8.21% to cut into its large YTD decline.
Updated to reflect new growth projections for Evolve
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