Daiwa cut its price target on Trip.com Group to HKD508 from HKD626, citing a double blow from macroeconomic weakness and regulatory compliance adjustments. The brokerage lowered its earnings-per-share forecasts for fiscal years 2026 through 2028 by 8% to 14%, with its projections 5% to 17% below market consensus. Trip.com's second-quarter revenue guidance of 3% to 8% year-on-year growth came in roughly 7% below analyst estimates.
Daiwa cut its price target on Trip.com Group to HKD508 from HKD626, citing a double blow from macroeconomic weakness and regulatory compliance adjustments. The brokerage lowered its earnings-per-share forecasts for fiscal years 2026 through 2028 by 8% to 14%, with its projections 5% to 17% below market consensus. Trip.com's second-quarter revenue guidance of 3% to 8% year-on-year growth came in roughly 7% below analyst estimates.
Daiwa cut Trip.com Group's price target 19% to HKD508, citing weaker Chinese domestic demand and regulatory compliance costs.
"The company's 2Q revenue guidance implies year-on-year growth of 3% to 8%, with the midpoint of 5.5% marking a significant slowdown and about 7% below market consensus," Daiwa said in a research report dated June 26.
The brokerage lowered its earnings-per-share estimates for fiscal 2026 through 2028 by 8% to 14%, reflecting a weaker revenue outlook. Daiwa expects transportation segment revenue to decline 20% to 30% year-on-year in the second quarter as Trip.com implements stricter traffic monetization discipline to comply with regulatory requirements. Adjusted operating margin is forecast to fall 3.6 percentage points year-on-year to 27.8% in the second quarter, partly offset by cost controls and AI-driven efficiency gains.
Trip.com shares plunged 12.6% on the Nasdaq and nearly 11% in Hong Kong after the company reported first-quarter net profit fell 40% to RMB 2.5 billion ($363 million). The stock has roughly halved since China's State Administration for Market Regulation launched an antitrust investigation into the company in January.
Daiwa reiterated its Buy rating on Trip.com despite the target cut. The brokerage said international operations remain the core growth driver, with the overseas business projected to deliver more than 50% year-on-year revenue growth in the second quarter, lifting its contribution to around 20% of total group revenue.
Trip.com's first-quarter revenue rose 17% from a year earlier to $2.4 billion, while accommodation bookings climbed 17% to $944 million and transportation bookings gained 12% to $877 million. The company forecast second-quarter revenue growth of 3% to 8%, citing macro headwinds including elevated energy pricing and geopolitical volatility alongside operational adjustments tied to regulatory compliance.
The SAMR investigation, announced in January, could result in "a significant fine" and other financial penalties, Trip.com said in its earnings statement. The company said it is fully cooperating with the probe but cannot predict its timing, outcome or consequences.
The guidance cut and regulatory overhang suggest Trip.com faces a prolonged period of margin compression as it adapts to stricter compliance standards. Investors will watch for any resolution of the SAMR antitrust investigation and second-quarter results due in August for signs of stabilization.
This article is for informational purposes only and does not constitute investment advice.
