Credit Suisse On Expedia: Stay On The Sidelines

Stephen Ju of Credit Suisse on Friday commented in a note that Expedia EXPE reported weaker than expected fourth quarter EBITDA due to an aggressive online and offline marketing spend. Ju notes that Expedia did report better than expected bookings and room night growth as a result of its marketing spend. However, the company offered a "somewhat disappointing" full year over year EBITDA growth guidance of 10 percent to 15 percent, falling short of the consensus estimate of 17 percent. As such, Ju recommends investors remain on the sidelines given increasing competitive pressure from Booking.com's entry to the U.S. which has yet to fully manifest. However, Ju does state that there exists demand-driven factors that can help adopt a more constructive stance. These include higher bookings of travel activity outside of the U.S. given the stronger U.S. dollar and a greater impact from the rise in Chinese travel demand given Expedia's ownership stake in eLong. Shares remain Neutral rated with a price target lowered to $88 from a previous $93.