Guggenheim's latest checks show stable room night growth quarter-to-date through November at Expedia Group Inc EXPE, and the online travel agency now lists more than 1 million properties.
The Analyst
Analyst Jake Fuller maintains a Buy rating on Expedia with an unchanged $160 price target.
The Thesis
Expedia's stable room night growth inspires greater confidence in the company’s Q4 prospects, Fuller said in a Thursday note.
The OTA is estimated to have added 170-180 hotels in 2018, which not only takes the company’s properties past the 1 million mark, but also bodes well for 2019-2020, the analyst said.
Although the recently added properties may take time to ramp, they could add up to more than 30 million annual room nights if the company is able to achieve “even a fraction of its typical productivity," Fuller said. The expanded property base represents “a material 2019-2020 driver,” he said.
The consensus estimate of 11-percent room night CAGR between 2018 and 2020 does not fully reflect the potential from the expanded property base, the analyst said, adding that the room night CAGR for the period could be closer to 16 percent.
Price Action
Expedia shares were trading down 3.08 percent to $108.53 at the time of publication Thursday.
Related Links:
Guggenheim: Expedia's Hiring Spree Is Tapering Off
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