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Why Analysts Are Bullish on a Stock That's Down 20%

Author: Chris Markoch. Article Posted: 8/6/2026.

Booking Holdings Inc. (NASDAQ: BKNG) was recently down 20% in 2026. However, BKNG has been climbing steadily off a base that formed in May, and the company’s latest earnings report is helping keep that momentum going.

Soft Guidance, but Growth Remains Intact

BKNG shot up 6% the day after the company delivered its Q2 2026 earnings report.

The company beat on both the top and bottom lines, confirming strong travel demand during the quarter. Forward guidance was cautious but requires some context.

The company guided to Q3 revenue of $9.4 billion to $9.55 billion, below analysts’ estimates of $9.71 billion.

However, even at the low end, that figure would represent a 3.9% year-over-year (YOY) increase.

Booking's Q2 Earnings Show Travel Demand Remains Strong

Revenue came in at $7.35 billion, up 8% YOY and above the high end of the company’s own 4% to 6% guidance range. Gross bookings grew 9% to $51 billion, driven by 5% room-night growth and an approximately 2% lift from constant-currency average daily rates. Adjusted earnings per share (EPS) of $2.54 topped analyst estimates and marked a 15% increase from the year-ago quarter.

Adjusted EBITDA rose 9% to $2.65 billion, outpacing revenue growth thanks to leverage across fixed operating expenses. Free cash flow of $3.6 billion was up 16% YOY, and the company returned a record $4.1 billion to shareholders through buybacks and dividends.

Margin Expansion Helps Offset Softer Revenue Guidance

Guidance may have landed below consensus, but the company’s underlying profitability is arguably the more important story for investors. Adjusted EBITDA grew 9% in the quarter, outpacing revenue growth of 8%. The primary reason was that adjusted fixed operating expenses grew just 6%, slower than the top line.

Management also raised its expected annual run-rate savings from its ongoing Transformation Program, moving the target from roughly $550 million to $650 million. That suggests the company sees additional room to cut costs even as it continues to invest in AI and mobile.

Capital returns backed up that discipline. Booking returned $4.1 billion to shareholders during the quarter, a company record, split between $3.7 billion in buybacks and $0.3 billion in dividends. Free cash flow of $3.6 billion was up 16% year over year, giving the company ample room to continue repurchasing shares aggressively.

Slowing Room-Night Growth Keeps the Bear Case Alive

None of this erases the deceleration visible in the underlying numbers. Room-night growth slowed to 5% in Q2, down from 6% in Q1 and 9% a year ago. Management attributed part of that softness to the ongoing conflict in the Middle East, which continues to weigh on long-haul international travel demand.

Q3 guidance calls for room-night growth of just 3% to 5%, the lowest range the company has posted in recent memory. That’s the part of the story that may be getting overlooked. A stock that traded down 20% for a reason doesn’t necessarily deserve a full reversal in a single quarter.

There’s another angle worth considering. Much of the post-earnings pop looks less like genuine excitement and more like relief that the results weren’t worse. Expectations had been driven down so far that a modest beat, paired with a cautious but not disastrous outlook, was enough to trigger a rally. That’s different from a stock re-rating driven by renewed conviction in the growth story.

Booking's Results Don't Tell the Whole Travel Story

The BKNG results aren’t necessarily indicative of the entire industry. Investors may recall that in its last quarter, Trip.com Group (NASDAQ: TCOM) delivered mixed results and tumbled by as much as 18%. Like Booking, Trip.com offered soft guidance for the current quarter.

Bulls could counter by noting that TCOM was up more than 13% in the 30 days ending Aug. 5. That could be a sign that institutions anticipated Booking’s results and believe Trip.com will post similar results in August.

BKNG Stock Nears Overbought Level After Earnings Rally

From a technical perspective, the sharp rally raises the risk of a near-term pullback. BKNG’s 14-day relative strength index (RSI) sits at about 69, just below the traditional overbought threshold of 70. Momentum indicators like this tend to mean-revert once they reach that zone, and BKNG has approached it several times over the past year without sustaining a breakout above it.

This might not mean the rally is over, but it does suggest that some near-term consolidation—or even a modest giveback of the post-earnings gains—wouldn’t be surprising, given how far and how quickly the stock has moved.

Can Booking Holdings Stock Extend Its Post-Earnings Rally?

Booking’s Q2 report didn’t change the long-term travel-demand story. It did change the market’s view of how bad conditions actually were. The stock’s 20% decline through late June priced in significant pessimism surrounding the Middle East conflict, slowing room-night growth and softer long-haul travel.

Tuesday’s results suggest that pessimism was overdone, at least for now. Whether that view holds through Q3, with room-night growth guided as low as 3%, will be the real test of whether this rally has staying power or is simply a relief rally that runs out of room.