JPMorgan initiates Vacasa at overweight, says vacation-rental stock is a better idea than Airbnb

Published Wed, Feb 16 20226:10 AM ESTUpdated Wed, Feb 16 20229:27 AM EST

Jesse Pound @/in/jesse-pound @jesserpound

A new entrant into the vacation-rental market may offer investors a better way to play the space than well-known brands like Airbnb, according to JPMorgan. Analyst Doug Anmuth initiated coverage of Vacasa , a rental property-management company, with an overweight rating, saying in a note to clients Wednesday that the vacation-rental company has some advantages against more established names in the space. "Large platforms such as ABNB, BKNG, and EXPE have lowered the barrier for homeowners to get online and generate demand, but managing the day-to-day operations remains daunting," Anmuth wrote. "Vacasa is a technology-led, end-to-end vacations-rental management platform that focuses on this pain point of homeowners to capture significant value, earning close to 48% of bookings as revenue (take-rate). Vacasa's take-rate is much higher than other alternative accommodations platforms." JPMorgan has neutral ratings on Airbnb and Expedia and an overweight rating on Booking . Additionally, Vacasa has partnerships with those companies and is a key part of their growth in the space, the firm said. Vacasa went public through a merger with a special purpose acquisition company, or SPAC, last year. The stock has struggled to break above the $10 per share value of the SPAC and then dropped sharply in December when Vacasa officially began trading. The SPAC boom has cooled considerably in recent months, as many of the stocks that entered the public market in that fashion have struggled and regulators have raised questions about the lack of disclosures required for those companies. Early stage tech stocks have also struggled in recent months, but JPMorgan said Vacasa stands out as a good opportunity despite that shift in sentiment. "We recognize the current trading environment is challenging for small cap growth stocks with negative margins, but we believe VCSA's compelling value proposition, strong 26% '21E-'24E revenue [compound annual growth rate], and undemanding 2.1x '23E revenue multiple are attractive," the note said. JPMorgan set a price target of $10 per share for Vacasa, which is roughly 38% above the stock's closing price Tuesday of $7.25. -CNBC's Michael Bloom contributed to this report.

A man pushes his bags on the departures level at Los Angeles International Airport (LAX) on May 27, 2021 in Los Angeles as people travel for Memorial Day weekend, which marks the unofficial start of the summer travel season.

Frederic J. Brown | AFP | Getty Images

A new entrant into the vacation-rental market may offer investors a better way to play the space than well-known brands like Airbnb, according to JPMorgan.