In 2025, profit margins are under pressure, Bank of America downgraded Trip.com Group Ltd. Sponsored ADR (TCOM.US) target price to $68.

Bank of America Securities reiterated its "buy" rating on Trip.com Group Ltd. Sponsored ADR (TCOM.US) and lowered the target price from $77 to $68, mainly reflecting expectations of international expansion investments and pressure on short-term profit margins. Bank of America Securities emphasized that, with its leading position in the Chinese high-end travel market and continuous potential for international expansion, Trip.com Group Ltd. Sponsored ADR is still seen as a key beneficiary in the industry. Trip.com Group Ltd. Sponsored ADR achieved significant performance growth in 2024. According to reports, the company's fourth-quarter net revenue increased by 23% year-on-year, and the full-year non-GAAP net profit margin reached a record 34%. The company announced a capital return plan, proposing to pay a $200 million dividend in 2025 and carry out a share repurchase of up to $540 million. During the Chinese New Year period, outbound travel bookings increased by 20% year-on-year, with inbound travel showing even more significant growth in the triple digits. However, despite strong travel demand, the softness in hotel and airfare prices offset revenue growth to some extent. Domestic hotel prices declined by low single-digit percentages year-on-year, while domestic and outbound airfare prices fell by high single to low double-digit percentages. As a result, the first-quarter revenue growth rate is expected to slow from 20% in 2024 to 16%. Goldman Sachs Group, Inc. noted that Trip.com Group Ltd. Sponsored ADR's fourth-quarter net revenue in 2024 reached RMB 12.7 billion, surpassing market expectations by 3.4%. However, due to the rapid growth of the international platform Trip.com business and increased investments, the company's gross profit margin declined from 82.4% in the third quarter to 79.3%. In terms of profit margins, due to the increase in revenue contribution from Trip.com business and incremental investments in overseas user and talent acquisition, it is expected that profit margins will come under pressure in 2025. Therefore, Goldman Sachs Group, Inc. lowered its non-GAAP net profit expectations by 16% to 17%. Trip.com Group Ltd. Sponsored ADR achieved significant performance growth in 2024 and excelled in outbound and inbound travel sectors. However, the company faces profit margin pressure and challenges in international expansion in 2025. Nevertheless, with its leading position in the Chinese high-end travel market and continuous potential for international expansion, the company is still considered a key beneficiary in the industry.