Oppenheimer: We're Upgrading Ctrip.com On Secular Growth 'Pillars'

In a report published Thursday, Oppenheimer analysts upgraded the rating on

from Perform to Outperform, with a price target of $80, after the company exhibited strong revenue momentum. The analysts identified Ctrip.com's growth pillars as mobile, open platform, yield management and outbound travel, which continued to drive robust top-line growth in 1Q. "Margins also outperformed, benefiting from operating leverage. The 47% top-line growth topped consensus of 42%E, and mobile contributed 70% of total transactions. Guidance for 2Q of 45-50% top-line growth and 6-10% non-GAAP operating margin both exceed our original ests," the analysts said. In the report Oppenheimer noted, "Net revenue of $373.4M in 1Q topped our est by 3%, driven by strong ticketing/packaged tour growth. Hotel vol/rev grew 60%/45% y/y. Ticketing vol/ rev expanded 104%/46% y/y (64% y/y air-ticketing vol growth). Packaged tour/ corporate travel rev grew 53%/31% y/y. Most "baby tigers" grew 2x-8x y/y in size." Mobile contributed 70 percent of the company's total transactions in 1Q, with total mobile downloads rising to 800M from 600M in 4Q14 and 120M in 1Q14. Open platform now has 5,000 third-party agents and represented 5-10 percent of hotel, more than 60 percent of air tickets, and more than 20 percent of packaged tour transactions. The analysts believe that this is "an effective way to expand CTRP's market share." The net revenue estimates for FY15 and FY16 have been raised by 3 percent to $1,815M and by 6 percent to $2,514M, respectively, to reflect a "robust growth trajectory." The non-GAAP EPS estimates for FY15 and FY16 have been raised from $0.73 to $1.00 and from $1.74 to $2.02, respectively.