Deutsche Bank: TripAdvisor To See Further Slowdown

Tripadvisor Inc TRIP is likely to see slowing growth along with cuts to consensus earnings estimates, an analyst said Friday.

The online travel company's shares have fallen more than 28 percent in the past three months, including a big drop last week when it missed quarterly profit expectations.

"We think 'how low could it go' for click-based ad growth is the focus of investors right now," Deutsche Bank's Lloyd Walmsley said in a note Friday.

Revenue from the segment grew sequentially just 5 percent in the recent period to $247 million, providing 70 percent of the company's total revenue.

The sequential growth rate for click-based ads grew 15 percent in the second quarter, and 43 percent in the first quarter.

Walmsley said the consensus estimate for the segment is likely to get cut, while the company faces further "headwinds" from a slower-than-expected success with its "instant bookings" program.

Hotel partners have been reluctant to sign on to the system, launched in May, which enables bookings directly on the TripAdvisor website.

Chief Executive Stephen Kaufer told investors recently that "the pipeline continues to grow, but not as fast as we would like."

But Walmsley called the new emphasis on instant bookings "the right strategy," and maintained a Buy rating on TripAdvisor.

In a separate note Friday, Stifel's Scott Devitt touted TripAdvisor's acquisitions of Viatour, which offers tours of local attractions, as well as the European
online restaurant booking service La Fourchette earlier this year.

TripAdvisor "has a significant learning curve" ahead, but "its the foundation of a much larger opportunity," according to Devitt, who maintained a Buy rating on TripAdvisor.

Devitt also reiterated a Buy rating on Priceline Group; Walmsley maintained a Buy on the online vacation rental company HomeAway Inc. and a Hold on Expedia Inc.