Expedia (EXPE) Downgraded By Credit Suisse

Multiple sources of top-line uncertainty and an unclear profitability picture have led to a downgrade of Expedia Inc. (NASDAQ: EXPE) to ‘Neutral’ from ‘Outperformer’ with a target price of $28 per share.

Positives such as intact secular/cyclical dynamics and favorable forex have been offset by factors like lower placement bias uptake, anniversary of service fee removals in March, impact of reduced promotional activities, etc. On the profitability front, pluses like enhanced cost control, media mix benefits and return on tech investments are offset by fee removal-driven margin pressure, higher spending on agency build out, etc. Overall, Credit Suisse has downgraded its 2010E EPS to $1.44 from $1.48, although multi-year secular growth and the free cash story remain intact for Expedia.