Morgan Stanley: Ctrip's business remains stable under regulatory uncertainty, target price $75, continues to recommend "overweight"

Morgan Stanley's research report indicates that Trip.com Group (09961.HK) has stable performance, with revenue exceeding expectations and a healthy outlook. Meanwhile, demand has been strong this season, with double-digit growth in domestic hotel bookings during the Lunar New Year period and an annual increase in average daily room rates (ADR); outbound tourism also recorded double-digit growth, with a 60% increase in bookings on the Trip.com international platform.

Management guidance suggests a revenue growth of 12% to 17% in the first quarter of this year; although the bank is relatively cautious about the monetization of transportation ticketing, it believes that the likelihood of reaching the upper end of the guidance is very high. However, the business mix has rapidly shifted towards the Trip.com international platform, resulting in a slight decline in operating profit margins, although the efficiency of marketing spending is also improving.

The bank believes that the results of the regulatory investigation will reset the stock price and is confident that the company can demonstrate that AI itinerary planning is not a negative factor for online travel platforms; it has raised revenue forecasts for 2026 and 2027 by 1%, while lowering earnings per share forecasts by 3% to 4% due to rising operating expenses. The target price for Trip.com (TCOM.US) in the U.S. stock market has been lowered from $87 to $75, maintaining an "Overweight" rating