Difference Of Opinion: Mizuho Initiates Trivago With Buy, JPMorgan Downgrades To Underweight

Sometimes, not even the professionals can agree on which direction a stock is likely to head next. On Thursday, both Mizuho and J.P. Morgan changed their coverage of Trivago NV – ADR TRVG but one analyst became more bullish just as the other turned more bearish.

The Analysts

JPMorgan analyst Doug Anmuth downgraded Trivago from Neutral to Underweight and maintained an $8 price target for the stock.

Mizuho analyst James Lee initiated coverage of Trivago with a Buy rating and $9 price target.

The Thesis

Trivago has too much advertising concentration from Booking Holdings Inc. BKNG and Expedia Inc EXPE; it is closing in on extremely difficult comps in the first half of 2018; and it is facing increasing competition in the travel space, JPMorgan's Anmuth said in a Thursday note. 

“While we prefer lodging within travel and appreciate TRVG’s focus in that vertical, we think meta search within lodging will remain challenged as long as large advertisers remain focused on improving performance ad spend efficiency,” the analyst said. 

At the same time that JPMorgan sees too many headwinds for Trivago, Mizuho's Lee said metasearch fundamentals “remain strong” for the company. Lee said he likes the ease-of-use of Trivago’s price comparison platform and said on Thursday that near-term disruptions to revenue growth stemming from changes to search ranking are “tactical, not structural” in nature.

Price Action

It seems as though Wall Street agrees with JPMorgan at the moment. Trivago stock was down 3.64 percent at the time of publication Thursday following the release of both notes.

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