MOND stock keeps “Buy” rating at Roth

Following the company’s most recent results, Roth MKM analyst Darren Aftahi has maintained his “Buy” rating on Mondee Holdings (Mondee Holdings Stock Quote, Chart, News, Analysts, Financials NASDAQ:MOND).

On March 14, MOND reported its Q4 and fiscal 2023 results, which were preliminary and unaudited. In the fourth quarter, the company posted Adjusted EBITDA of $6.9-million on Net Revenue of $61.1-million, topline that was up 78 per cent over the same period a year prior.

“Mondee is pleased to report record net revenues and Adjusted EBITDA in Q4 and full year 2023 (“FY 23″), exceeding guidance,” CEO Prasad Gundumogula said. “This strong year-over-year growth was fueled by product and geographic expansion of our marketplace, industry-leading technology advancements, and sustained leisure travel demand. We are focused on marketplace expansion in both content, geography and new-era distribution as well as widening our technology lead in AI with investments in Abhi, the first AI-powered travel platform and the acquisition of AI pioneer Purplegrids. These initiatives, coupled with sustained transaction growth, take rate improvement, and cost control are expected to enhance revenues and profitability.”

The analyst says the quarter was a beat, but guidance was not all it could have been.

“4Q results beat as higher transactions and take rate led to 10% higher revenue and 23% better adj. EBITDA. MOND benefited from increased bookings diversification as airfare fell to ~57% (from 91%) of total FY23 transactions, which aided take rate expansion in 4Q to 9.9% (above expectations and +80bps q/q). We expect some fluctuations around that level in FY24 with puts and takes like increased diversification of content and packages, offset by the strength of short-haul flights (lower take rate), but the overall trend in take rate remains positive. FY24 guidance was mixed, with in-line revenue (+17% y/y) but modestly lower adj. EBITDA. We anticipate a revamp to MOND’s Abhi (AI-powered travel platform) to bring more localized and personalized content recommendations to the platform, which should enable greater attach rates on packages, while also implementing more corporate back-end AI capabilities, such as streamlined marketing, all of which would be done in house. We expect to hear more about these functionalities as we get close to an updated Abhi in mid-2024.”

In a research update to clients March 14, Aftahi maintained his “Buy” rating on MOND, but lowered his price target on the stock from $5.50 to $4.10.

The analyst thinks MOND will post EBITDA of $32.5-million on revenue of $252.5-million in fiscal 2024. He expects those numbers will improve to EBITDA of $38.8-million on a topline of $278.6-million in fiscal 2025.

“Our $4.10 price target is based on 15x EV/’24E EBITDA to our $32.5M EBITDA estimate,” the analyst added. “Risks that could impede MOND from obtaining our price target include: inability to expand its market beyond travel agents and enterprises, slower growth in higher-margin segments, changes in supply partners, poor platform performance, and outside events such as macroeconomic headwinds reducing global travel, pandemics, geopolitical headwinds, and travel restrictions.”