Orbitz Leads Online Travel Sector Lower Following Goldman Note

On Wednesday, Goldman Sachs updated online travel forecasts and touched on changes ahead for the sector. Analyst Heath Terry believes the sector's growth “remains steady,” but tougher comps in Asia as well as foreign exchange headwinds in Latin America and Asia should offset “improving macro environments in the US and Europe.” Terry sees mobile and meta search acting as catalysts in the future for “market share consolidation and long-term margin improvement for the largest OTAs.” The analyst favors Priceline.com

as “the best leveraged name from both a geographic and business mix perspective.” The analyst sees Orbitz

“losing share in both online and total travel bookings as Orbitz's business gradually relies more and more on hotels where it faces tough competition.” This combined with a stretch valuation led to Terry downgraded shares of Orbitz from Neutral to Sell and set the price target to $8. In addition to the Orbitz downgrade, Terry raised Expedia's

price target from $65 to $75, raised Tripadvisor's

price target from $78 to $103, and maintained a $1,500 price target on Priceline.com. Online travel advisors are all moving to the downside today: