Airbnb Inc. (NYSE: ABNB) shares have climbed over the past week, and one analyst has just come out with a positive report on the stock. As travel is beginning to return, the reopening trade is beginning to materialize and players like Airbnb could benefit heavily from this.

Needham initiated coverage with a Buy rating and a $210 price target, implying upside of 17% from the most recent closing price of $174.88. Overall, the brokerage firm likes Airbnb’s strategic positioning as a share-taker in the large, online travel market.

Needham believes that Airbnb’s unique, high-quality platform resonates with customers, leading to a powerful network effect. The pandemic significantly dampened travel but also changed it, the firm believes, unlocking the value of Airbnb to new customers. The realization of lower spending necessary to acquire customers is expected to drive adjusted EBITDA growth well in excess of revenue growth as bookings return.

Despite the growing popularity of Airbnb, the company has yet to gain a material share of travel bookings. However, the brand is well known and resonates with customers, leading to a powerful network effect of repeat bookers, word of mouth advertising and even bookers becoming hosts, all of which improves the quality of the platform.

The United States appears primed for a return to travel this summer. Needham expects the company to be a key beneficiary of that return. While the pandemic put significant downward pressure on travel over the past 12 months or so, there have been resilient areas that the firm believes are supportive of the Airbnb’s platform, namely domestic, closer to home, outside the top cities and longer stays. Needham detailed in its report:

While we do not know if these types of travel will gain share in the future, we do believe their resilience during the pandemic may have driven people to try ABNB who would not have otherwise. Adding more people to the ABNB flywheel should drive more growth and a better platform over time, we believe. Consensus assumes 2H’21 bookings return to ’19 levels, which we believe is achievable, although we are closely monitoring the third wave in Europe (US was 55% of bookings in ’20, EMEA 28%).

Airbnb stock traded up 1% to $176.88 on Tuesday, in a post-IPO range of $121.50 to $219.94. The consensus price target is $188.26.

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