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BTIG analyst Jake Fuller sees an FX risk facing Booking (NASDAQ:BKNG) heading into the earnings results as EUR/USD tests the parity for the first time in 20 years.
Fuller believes the company’s high exposure to EUR is neither into the consensus nor guidance. The analyst estimates that Booking generates about 45% of total bookings from Europe.
“Within Europe, we assume an 85-15 split between the EUR and GBP. However, given OpEx is similarly weighted, currency swings impact the topline and not margin for BKNG,” Fuller said in a client note.
The analyst sees a headwind to bookings of $6.9 billion over the past 9 months. On how this may impact the Q3 outlook, Fuller added
“Taking into account the FX headwind, we would expect BKNG to talk about bookings growth ~10 pts faster than room nights for 3Q vs. 2019. Based on our view of room nights, that would imply bookings growth of 20-25% vs. 2019 (model 2Q at +35%).”
Finally, the analyst concludes by saying that the company’s EUR exposure is “likely material” and will impact the Q3 outlook.
Fuller is Neutral-rated on BKNG. Booking shares are down 1.6% in pre-open Wednesday.
