Cantor Fitzgerald has initiated coverage on Despegar.com (NYSE:DESP), a leading online travel company in Latin America, with an Overweight rating and a price target (PT) of $11.00. The firm highlights the company's valuation as particularly attractive in the context of its growth prospects and profitability improvements.
Despegar.com's current valuation is trading at approximately 5.0 times its estimated 2024 earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), which is favorable when compared to its peers. Expedia Group Inc. (NASDAQ:EXPE) trades at 6.5 times, Booking Holdings Inc. (NASDAQ:BKNG) at 15.5 times, and MakeMyTrip Ltd. (NASDAQ:MMYT) at 31.1 times their respective 2024E EV/EBITDA.
The firm forecasts that Despegar.com will experience robust revenue growth from 2023 to 2025, second only to MakeMyTrip. Given the fragmented and growing travel market in Latin America, the analyst suggests that the potential for a rerating of the company's stock outweighs the risks of a derating.
The positive outlook for Despegar.com is based not only on potential multiple expansion but also on expected growth in adjusted EBITDA and an increasing cash balance. The firm indicates that even without an expansion of its multiple, Despegar.com's shares have the potential to perform well due to these financial improvements.
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