Trip.com (TCOM) Stock Forecast & Price Target

Trip.com Group's stock outlook remains positive, driven by a robust revenue growth of 23% year-over-year in the fourth quarter, bolstered by a significant 70% growth in its trip.com platform. The company's strategic shift towards higher-margin outbound travel, with expectations for outbound capacity to recover to 85%-90% by 2025, positions it well to capitalize on China's low passport penetration rate of 12%. Furthermore, strong segment performance, particularly a 33% increase in accommodation revenue and healthy growth rates across domestic and international travel, underscores Trip.com’s potential for margin expansion through a favorable revenue mix and enhanced operational efficiencies.

Trip.com Group is experiencing downward pressure on its stock due to significant contraction in operating profit margins year-over-year and quarter-over-quarter, largely attributed to increased investments in international markets. The anticipated deleverage of approximately 200 basis points in sales and marketing spending for FY25 poses a risk to the company's margin reset, compounded by the shift in revenue mix as the company expands its domestic business. Additionally, despite the lack of waning travel demand, competition in the crowded online travel agency market in China, coupled with ongoing macroeconomic concerns, raises doubts about Trip.com's ability to sustain its growth trajectory.