Should I buy Airbnb shares after Wells Fargo raises its price target?

Shares of Airbnb, Inc (NASDAQ: ABNB) have been advancing for several weeks, and the technical chart suggests the price may hit resistance of $ 160 this month. Airbnb will benefit from the travel pickup, but this company is not undervalued at the current share price.

Fundamental analysis: Wells Fargo raises price target to $ 200 on Airbnb

Airbnb operates an online marketplace for accommodation, primarily host families for vacation rentals and tourist activities. The company is based in San Francisco and its platform is accessible through the website and mobile app.

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Airbnb shares continue to be strong after the company released its first quarter results last month. Total revenue increased 5.4% year-over-year to $ 886.9 million, while GAAP EPS was $ -1.95 ($ 0.81 missed).

It is important to mention that the company attracted more than $ 10 billion in bookings in the first quarter of 2021, which is an increase of more than 50% from the same period of the previous year. Wells Fargo raised its price target to $ 200 on Airbnb following the first quarter earnings report because it sees the company well positioned to succeed in 2021 and, more importantly, beyond.

“Airbnb delivered strong results in the first quarter, which we see as demonstrating the company’s positive momentum as it emerges from the pandemic. We see Airbnb as possibly the most important game for the future of remote and hybrid working, and with stocks now trading below the ABNB IPO price and well below our target. price, we see the risk / return as attractive at current levels, ”Wells Fargo reported.

Looking ahead, Airbnb has strong growth prospects, but with a market capitalization of $ 90.30 billion, we can see that this stock is not undervalued. The company’s EBITDA is negative, the book value per share is around $ 5, and many positive expectations have already been included in the share price.

Technical Analysis: $ 160 represents the first level of resistance

From a technical point of view, Airbnb shares could exceed current price levels in June, but the risk / reward ratio is not sufficient for value investors.

Data source: tradingview.com

Airbnb shares have been advancing for several weeks, and for now, the positive trend remains intact. If the price goes above $ 160, the next target could be around $ 170, but if the price drops below the $ 140 support level, that would be a firm “sell” signal.

Summary

Airbnb shares continue to be strong as Wells Fargo raised its price target to $ 200 after first quarter results. Wells Fargo sees this company as a leading “pick” for recovery and well positioned to succeed in 2021 and, more importantly, beyond. Airbnb will benefit from the travel pickup, but this company is not undervalued at the current share price.

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