Wunderlich On TripAdvisor: Lower Hotel Shopper Clicks Affecting Results

Blake T. Harper of Wunderlich Securities reiterated a Hold rating on TripAdvisor Inc TRIP on Wednesday with a price target lowered to $90 from a previous $100 following the company's third quarter results which were reported on Tuesday.

TripAdvisor reported a better-than-expected third quarter revenue but EBITDA and earnings per share were 12 percent and 20 percent lower than expected. In addition, the company lowered its full year fiscal 2015 guidance for its click-based advertising business.

“The company experienced lower clicks per hotel shopper starting in mid-August and expects it to continue through Q4 given past seasonal trends,” Harper explained in his note. “The trend was covered up to an extent by the metasearch transition in 2013 but has returned, albeit to a lesser degree than the company has historically seen. The lower CPC revenue guidance reflects the continued sensitivity of the business to hotel shopper activity.”

Harper does note that TripAdvisor's Instant Booking feature continues to see higher conversions than metasearch results. The analyst expects the company to continue rolling out and expanding this feature to mobile devices which will is becoming “increasingly important” as half of the company's traffic stems from mobile.

Bottom line, Harper is looking for mobile, instant booking and other verticals such as local to accelerate the company's revenue and earnings per share growth. If that were to happen the analyst may become more positive on the stock.

Shares were recently trading at $73.13, down 12.6 percent.