Credit Suisse Comments On Online Travel Companies

Credit Suisse released notes for online travel companies Friday after an analyst departure. Below are highlights from analysts led by Stephen Ju along with current ratings and price targets.

Expedia Inc EXPE - Neutral, $87 price target

"Our investment thesis remains unchanged as we remain on the sidelines as the competitive impact from Booking.com's entry US market are still yet to come. Additionally, Hotwire.com's challenges with access to inventory could be amplified in the seasonally stronger/larger quarters. Stepping back and looking bigger picture, on the positive side we believe Expedia has made the right investments early on to take advantage of the incremental traffic from mobile/tablet – this could be a catalyst for further share gains versus offline competitors."

HomeAway, Inc AWAY - Neutral, $40 price target

"We carry a constructive view on AWAY shares given that its leadership position and scale in the nascent vacation rental market should enable it to further extend its lead through the roll out of features and tools that remove transactional friction for both the property owner/manager and the consumer. In this respect the trajectory the company has been on to transform from a classifieds platform to a marketplaces platform remains unchanged. Against this larger thematic backdrop, we will be monitoring the progress of the following initiatives that will help to deliver against that goal: 1) the intent to require the majority of listing to be online-bookable by the end of 2016. 2) site-features to improve calendar accuracy (which was a key point of consumer friction) and 3) the PPB initiative, which we believe has the potential to increase both the growth trajectory and margin profile."

Orbitz Worldwide, Inc. OWW - Neutral, $10.50 price target

"Our investment thesis remains unchanged as Orbitz, the third largest US OTA, has proven itself to be one of the few companies in the highly competitive space that can implement best in class technology and re-orient towards the more profitable hotel segment which should enable the company to at least maintain share. Orbitz does have numerous growth initiatives that create the potential for upside, but visibility is limited and we maintain and a wait-and-see approach. The products and initiative we will be monitoring include: (1) new loyalty program designed to drive an increase in the hotel revenue mix, customer LTV, and hotel attach rates; (2) new agreements with three GDS providers commencing in FY15 to provide better economics and velocity."

Priceline Group Inc PCLN Outperform, $1450 price target

"Our investment thesis remains unchanged as our rating is based on Priceline's open-ended growth opportunity predicated on continued share gain in the European hotel market. Additionally its scale in that fragmented supply base provides a structural moat for the core Booking franchise, as it will be difficult for other would-be supply aggregators to replicate. We also see potential for significant growth coming from Asia - China has now become the largest outbound travel market at $100b in gross travel bookings in 2012 (overtaking the US and Germany). We believe Priceline is well-positioned to participate given its existing global supply base, which it looks to link with the coming increase in demand vis-à-vis its partnership with Ctrip."

TripAdvisor Inc TRIP Outperform, $105 price target

"Our thesis remains unchanged as the fruits of TripAdvisor's work to execute a transformation (Meta) to improve the consumer value proposition by increasing users' ability to more reliably compare hotel prices are still unrealized. Based on our proprietary survey, there appears to be a high inclination to use the Meta product amongst the small number of users who are already aware of the offering but awareness of this change still remains low. A modest increase in the conversion of the ~60% of hotel shoppers that do not use TripAdvisor as a price comparison tool will have an outsized financial effect on the business as will generate incremental CPC-based revenue on what should be little incremental cost."