Stephens: Buy HomeAway, It's Worth $40/Share

In a report published Thursday, Stephens analyst Kyle Evans initiated coverage of

with an Overweight rating and a price target of $40. HomeAway is the largest digital marketplace for vacation home rentals with over 1 million listings in 190 countries, with 40 dedicated websites in 22 languages, supported by 13 global offices. The company's stock has been weighed down by the recent execution issues and "unfounded concerns" surrounding Airbnb. "AWAY is our Best Idea, and we recommend investors buy this best-in-class name in the vacation home rental industry in front of platform improvements that we ‘s believe will unlock operating leverage in the business model," analyst Kyle Evans mentioned. In the report Stephens noted that HomeAway derives its revenues from two categories, one being listing, which includes annual subscriptions and commissions, and the other one which comprises of ancillary products like software and advertising. "U.S. operations accounted for 59% of total revenue in 2014 and international accounted for 41%. Roughly 35% of revenue is EU based while approximately 5% is Australia. FX headwinds have been material for AWAY," Evans pointed out. The execution and competitive concerns surrounding the company appear "overblown," the report said.