Cantor Fitzgerald Sees 'Strong' Q2 Results Out Of Expedia

Expedia Inc EXPE is scheduled to announce its second quarter financial results after the market closes on Thursday. In a report rolled out Tuesday, Cantor Fitzgerald analysts Naved Khan, Youssef Squali and Kip Paulson looked into the company ahead of the report and reiterate a Buy rating and $120.00 price target.

The analysts anticipate strong results, with earnings of $1.07 per share on revenue of $1.646 billion, with FX resulting in a $29 million contribution to sales and a ~$0.04 positive impact on EPS. These estimates compare to the Street’s consensus of $0.85 per share and $1.661 billion.

The firm’s checks show that paid clicks to Expedia.com surged nicely in the second quarter, about 22 percent year-over-year. The analysts “view the healthy growth in paid click activity to be indicative of higher ad spending on Google's paid search to capitalize on an improved traffic conversion/ROI.”

The checks also suggest that, over the quarter, visitation to Hotels.com and Trivago also increased, same as hotel room rates, which continued to rise on a year-over-year basis (FX-neutral) across the U.S. and Europe. However, travel-related commentary from Google Inc GOOGL GOOG and Tripadvisor Inc TRIP has been somewhat mixed this quarter.

Given the FX headwinds, however, Cantor expects management to guide conservatively and reiterate previous guidance for year-over-year EBITDA growth in the 10 to 15 percent range (excluding eLong and including a 700bps hit from FX).

Shares of Expedia rose 2.1 percent on Tuesday.