Core Viewpoint - Booking Holdings Inc. is recognized as one of the 13 most promising long-term stocks to buy according to hedge funds, reflecting strong investor confidence in its growth potential [1]. Group 1: Analyst Upgrade and Growth Outlook - Morgan Stanley upgraded Booking Holdings from Equal Weight to Overweight, setting a price target of $5,500, down from $6,150, indicating a positive long-term growth outlook [2]. - The analyst emphasized that Booking is likely to remain a key player in the travel industry, capable of leveraging traveler data for high-margin direct bookings [2]. - Despite the evolution of agentic tools, Booking and other online travel agencies are expected to maintain their importance in the travel ecosystem [2]. Group 2: Financial Performance - In Q4 2025, Booking reported 285 million room nights, a 9% increase year-over-year, exceeding company expectations [3]. - Gross bookings and revenue rose by 16%, while adjusted EBITDA increased by 19% to $2.2 billion, and adjusted earnings per share grew by 17% [3]. Group 3: Strategic Initiatives - The company’s Transformation Program, initiated in November 2024, has already achieved approximately $550 million in annual cost savings, reaching the high end of earlier targets [4]. - Booking Holdings operates through five major brands: Booking.com, Priceline, Agoda, KAYAK, and OpenTable, providing a diverse range of online travel and restaurant reservation services [4]. Group 4: Leadership Insights - President and CEO Glenn Fogel highlighted the company's strong operational performance and resilience in travel demand, supported by its global platform [2]. - Fogel also noted advancements in AI-driven capabilities and ongoing execution of the Connected Trip strategy, with a focus on growth in key regions like Asia and the U.S. [2].

Core Insights - Booking.com has reached a mutual agreement with French tax authorities to pay 153 million euros for a tax reassessment covering the period from 2006 to 2018 [2] Financial Performance - Booking.com exhibits a free cash flow yield of 5.5%, which is considered high compared to other stocks [7] - The company has a 3-year average revenue growth of 19.9% and an operating margin of 30.8%, indicating strong fundamentals [7] - Currently, Booking.com stock is trading 12% below its 2-year high and 8.0% below its 1-month high, with a price-to-sales ratio lower than its 3-year average [7] Investment Strategy - Investing in a diversified portfolio, such as the High Quality Portfolio (HQ), has shown to outperform benchmarks like the S&P 500, achieving returns over 91% since its launch [4][10] - The HQ Portfolio has a win rate of approximately 74% for the 12-month horizon, producing an average return of nearly 18% even during stable periods [11] Market Volatility - Booking.com has experienced significant stock declines in the past, including nearly 100% during the Dot-Com Bubble and around 66% during the Global Financial Crisis [8] - The stock has also faced drops of approximately 27% and 40% due to corrections and inflation shocks in 2018, and a 45% decline during the Covid selloff [8]