Sell-Side Lifts Expedia Price Targets After Strong Q4 Report, 2019 Outlook

Shares of online travel agency Expedia Group Inc EXPE soared after a positive earnings report Thursday and company expectations for earnings growth that outpaced earlier Street expectations.

Expedia said it expects 2019 growth in the 10-15-percent range, ahead of Wall Street estimates for growth of less than 10 percent.

The Analysts

• Raymond James analyst Justin Patterson reiterated an Outperform rating and lifted the price target from $146 to $150.  
• Bank of America Merrill Lynch’s Justin Post reiterated a Buy rating and bumped the price target from $148 to $156.
• Webush analyst James Hardiman maintained a Neutral rating and raised the target price from $125 to $137.
• Citibank analyst Mark May maintained a Buy rating and lifted the price target from $155 to $165.
• Deutsche Bank’s Lloyd Walmsley maintained a Buy rating.

Raymond James

The company’s core business — online travel bookings — exceeded expectations, and growth looked healthy across different regions, Patterson said. “The core takeaway for investors: execution is back on track, the strategic initiatives are working and EBITDA estimates are going higher,” the analyst said. 

BofA 

Post noted that the better-than-expected 2019 growth outlook and said BofA holds a positive three-year growth outlook based on more direct traffic to Expedia's online travel brands, better traction from the HomeAway vacation rentals brand in some markets and a slowing in how much the company needs to spend on cloud-based infrastructure.

Wedbush

Expedia’s success was driven by more efficient use of its selling and marketing expenses, both for Expedia brands and also at German company Trivago NV TRVG, in which Expedia holds the majority stake, Hardiman said. Long-term, the company’s business looks good as online booking becomes the norm, he said. 

Citi

Despite some international weakness, Expedia continues to execute well on its investments, May said. 

Deutsche Bank

Walmsley acknowledged headwinds from cloud spending and some disappointment in the outlook for HomeAway, but said he sees a “solid path for the year” in online travel bookings.

Price Action

Expedia shares were up 2.35 percent at $130.88 at the time of publication Friday. 

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Photo courtesy of Expedia.