7 Things Bob Peck Is Watching At HomeAway

In a note published Wednesday morning, SunTrust Robinson Humphrey recapped HomeAway, Inc. AWAY's earnings. The company reported earnings that beat Wall Street estimates, revenues in line with forecasts, and guided revenues below consensus.

Following these results, SunTrust maintained a Buy rating and $38 price target on the stock, and adjusted estimates to account for the impact of FX pressure. Analysts wrote that they expect “leverage in the EBITDA line to accrue in 2016 and beyond.”

Related Link: Why Credit Suisse Is Cutting Targets At HomeAway

Bob Peck, in particular, pointed out seven themes investors should keep an eye on:

1. HomeAway reported a solid fourth quarter with ex-FX growth of 25 percent and EBITDA margins of 26 percent, above the Street’s expectations.
2. First quarter and 2015 revenue guidance are “a bit light optically, but inline to better backing out Fx impact (FY15 ex Fx guidance 21-13% vs. organic ex Fx growth of ~22% in FY14). EBITDA guidance light, impacted by spending and Fx. Marketing impact in-line with recent expectations.”
3. While the conversion improvement for PPB listings is a positive (particularly in Europe), traffic in Europe remains a concern.
4. Total listings growth was slowed intentionally to focus on conversion. Peck and his team see this as a “prudent long term decision as traffic continues to grow (+17% organic) and new marketing program set to launch. Sort order and lever levers remain.”
5. “New ad campaign to launch in US and 4-5 key markets in Europe. Focus on performance marketing (some brand).”
6. Some other positives include “price increases for subscriptions started in January, online bookable properties continue to grow, payments platform decoupling at end of 2Q, and fraud improvements.”
7. The new distribution channels stand as a potential catalyst in 2015 (Expedia, Inc. EXPE is also expanding).