Jefferies reiterates Buy rating on Trip.com stock, maintains $85 price target

Trip.com Group (TCOM) received reiterated "Buy" ratings and increased price targets from Jefferies ($85), JPMorgan ($90), and Barclays ($85) following strong Q2 2025 results, including a 16% net revenue increase and $1.01 non-GAAP EPS. Analysts highlight the company's 80.86% gross profit margins, robust domestic and outbound travel growth, AI integration, and significant untapped potential in China's inbound travel market, which saw over 100% YoY booking growth. Despite the positive financial performance and outlook, TCOM experienced a slight after-hours stock decline, reflecting cautious investor sentiment.

Analysis

Trip.com Group (TCOM) is benefiting from a strong analyst consensus, with Jefferies, JPMorgan, and Barclays issuing positive outlooks and raising price targets to a range of $85 to $90. This bullish sentiment is grounded in robust Q2 2025 financial performance, where the company reported a 16% year-over-year increase in net revenue to RMB 14.8 billion and a non-GAAP diluted EPS of US$1.01. The company's operational efficiency is underscored by an impressive 80.86% gross profit margin. Growth is being driven by sustained domestic travel volume, solid outbound revenue, and the integration of artificial intelligence to enhance both user experience and cost structures. The most significant future growth opportunity appears to be in China's inbound travel market, which, while still in its early stages, has already seen bookings increase over 100% year-over-year. Management highlights the substantial runway for this segment, noting it currently represents less than 0.5% of China's GDP. Despite these strong fundamental indicators, the stock's slight decline in after-hours trading points to a degree of investor caution that contrasts with the overwhelmingly positive operational news.

Key Decisions for Investors

• Given the strong Q2 earnings, high gross margins, and uniformly positive analyst price target revisions, investors could view any short-term price weakness as a potential accumulation opportunity to gain exposure to the secular travel growth theme.
• The primary long-term catalyst is the expansion of China's inbound travel market; investors should closely monitor metrics related to this segment, as its growth from a base of less than 0.5% of GDP represents the most significant source of potential upside.
• The slight after-hours stock decline following excellent results suggests a potential disconnect between fundamentals and market sentiment, warranting an assessment of whether the current valuation fully reflects the positive outlook or if this is a temporary dislocation.