3 Reasons Credit Suisse Is Still Positive On TripAdvisor

Credit Suisse maintains its Outperform rating on Tripadvisor Inc TRIP despite the company dished out mixed results for the third quarter.

TripAdvisor, an online travel company, saw a moderation in deterioration of revenue per hotel shopper to $0.45, but it ultimately fell short of Credit Suisse’s $0.49 estimate as the company took steps to revamp its mobile app and prioritize Instant Book.

As the plans to invest heavily in marketing next year, the brokerage expects adj. EBITDA growth to resume in the second half of 2017.

Justification

Analyst Stephen Ju’s bullish thesis is based on three factors:

1. “Increased conversion rates from Instant Book will raise the value of the entirety of TripAdvisor's ad inventory.”
2. “Worst of the monetization headwinds and compression of Revenue per Hotel Shopper appear behind us.”
3. “Growing consumer awareness of not only Meta but also Instant Book.”

That said, the analyst cut his FY 2016 estimates to reflect third-quarter results. Ju now expects FY 2016 revenue and adjusted EBITDA estimates at $1.49 billion/$361.9 million versus prior estimate of $1.51 billion/$365.7 million.

Ju, who slashed his target price to $65 from $78, also trimmed his fourth-quarter revenue forecast to $322 million from $340 million.

At last check, shares of TripAdvisor were down 0.53 percent to $52.35.