Five Battered Stocks Riding Vaccine Hopes to Pre-Covid Levels

(Bloomberg) -- Investors are increasingly betting that Covid-19 vaccinations will make life normal again for Americans next year by buying into some hard-hit travel and entertainment stocks ahead of what they expect will be surge in pent-up demand. Some are worried they might be too optimistic.

Shares of companies that suffered catastrophic revenue losses -- like Live Nation Entertainment Inc. and Hilton Worldwide Holdings Inc. -- are trading around where they started the year. Some, like Expedia Group Inc., are even on track to close out 2020 with double-digit gains, despite projections for it to take years to recover lost sales.

To Michael O’Rourke, chief market strategist at Jonestrading, the rallies are a natural response in a market of extreme valuations and bifurcation as investors hunt for bargains. Yet on Wall Street, the jury is still out as analysts have yet to turn overwhelmingly bullish.

“It’s an expensive market all around,” he said. “These names that are still below their highs and below previous peaks are more attractive than the names that have been running throughout the course of the year.”

Here’s a closer look at a handful of these stocks.

Live Nation

Live Nation is less than 1% away from breaking even for the year. The concert promoter was one of the hardest hit by Covid-19 as large gatherings were shunned to avoid the spread of the disease. Live Nation revenue is projected to drop 84% this year and not exceed 2019 levels until 2022, according to the average analyst estimate compiled by Bloomberg.

Eventbrite

After a record November that saw the stock gain 82%, Eventbrite Inc. is now down just 10% in 2020 despite revenue estimated to decline 67%. The ticketing company that specializes in smaller events isn’t expected to return to 2019 sales levels until 2023. The stock is now trading nearly 60% above the average price target of $11.40 on Wall Street and only two of the six analysts covering the company have buy ratings.

Hilton Worldwide

The hotel-owner’s sales are projected to be down 52% this year, yet the stock is just shy of where it traded at the beginning of January. Hilton’s revenue isn’t expected to exceed 2019’s until 2023. Less than half of the analysts covering the company recommend buying the stock.

SeaWorld Entertainment

The amusement park owner SeaWorld Entertainment Inc. has rallied back to within 10% of where it was at the start of the year. Revenue is projected to be down 71% this year and not reach 2019 levels until after 2022. Of the 11 analysts covering the company, seven recommend buying the stock.

Expedia

The online travel agency is up 22% in 2020 despite revenue projected to be down 55%. Revenue isn’t expected to rebound to 2019 levels until 2023. Expedia is trading 10% above the average price target. Of the 33 analysts covering the company, only 11 have buy ratings.

©2020 Bloomberg L.P.