UPDATE: Monness Crespi Hardt Downgrades Expedia to Neutral, Reiterates $70 PT
In a report published Monday, Monness Crespi Hardt downgraded its rating on Expedia (NASDAQ: EXPE) from Buy to Neutral, and reiterated its $70.00 price target.
Monness Crespi Hardt noted, “We are downgrading EXPE shares to Neutral from Buy. We are downgrading EXPE shares because they are modestly less than our $70 target and because 2013 Street expectations may be a bit rich. We believe margin expansion may prove to be more difficult in 2013 due to intense competition for hotel room nights between EXPE and priceline.com (PCLN-Neutral-$685.56.) Moreover, cutthroat competition in the Chinese OTA market is leading to extreme sales and marketing deleverage at eLong (LONG/Not rated), a market trend that has generated less investor attention than it deserves. While our 2013 revenue and EBITDA estimates of $4.6b and $923m remain in the ballpark with Street consensus ($4.5b and $925m), our underlying assumptions for Sales and Marketing per hotel room night are aggressive. As such, we think EXPE may deliver less incremental EBITDA in 2013 than our and Street expectations imply. Even if the company could eventually get to 2013 Street consensus EBITDA, it is unlikely that it will guide to current expectations of 16.1% EBITDA growth on 13.6% revenue growth.”
Expedia closed on Friday at $67.25.
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