Investors looking for the next evolution in tech-supported travel should be thinking about Mondee Holdings (Mondee Holdings Stock Quote, Charts, News, Analysts, Financials NASDAQ:MOND), according to Roth Capital Partners analyst Darren Aftahi. Roth Capital initiated coverage of the company on Tuesday with a “Buy” rating and $12.00 target, with Aftahi calling Mondee a disruptor of legacy platforms in the travel marketplace with its feature-rich, gig-style model.
Austin, Texas-based Mondee, which began trading on the Nasdaq in July of this year, has a portfolio of globally recognized platforms and brands in the leisure and corporate travel sectors, processing over 50 million daily searches and billions of dollars in transaction volume yearly. The company aims to connect leisure travel advisors and gig economy workers with over 500 airlines worldwide and over one million hotel and vacation rentals, packages and ancillary products.
The company reported its third quarter 2022 financials last month, showing net revenue up 73 per cent to $39.5 million and adjusted EBITDA of $3.7 million compared to negative $0.1 million a year earlier.
“We are excited by yet another outstanding quarter during which net revenue reached 150 per cent of the pre-pandemic 3Q19 actual net revenue, even though international travel, which represents a substantial part of our business, has recovered to only 67 per cent of its pre-pandemic levels,” said Prasad Gundumogula, Chairman, CEO and founder, in a press release.
Aftahi said expansion in Mondee’s content is expected through future M&A (the company has made 14 acquisitions to date), while Mondee remains underpenetrated in its airline total addressable market at five per cent of the North American B2B air travel market. The analyst argued that with more content will come incremental opportunities to layer on bookings with multiple services (airfare, hotel and rental care, e.g.) and other services for high-margin revenue streams.
“Beyond giving a facelift to the industry’s legacy technology, MOND’s platform seeks to capitalize on the growth of social commerce expanding beyond traditional travel agents by targeting gig workers and influencers, which we believe should help transaction growth and capitalize on the influx of influencer marketing,” Aftahi wrote.
On valuation, Aftahi said Mondee has faster-than-average growth and expanding margins, which warrant a premium multiple to its peer group. The analyst’s $12.00 target is based on a 4.5x EV/net sales on 2023’s numbers, whereas its peer group is at 3.6x and its higher-growth travel peers are at 4x-5.5x. Aftahi is currently estimating MOND to generate full 2022 revenue and EBITDA of $157.6 million and $15.4 million, respectively, and 2023 revenue and EBITDA of $226.0 million and $40.3 million, respectively. At press time, his $12.00 target represented a projected one-year return of 39 per cent.