Expect Headwinds To Persist For TripAdvisor

Cantor Fitzgerald said Tripadvisor Inc TRIP’s near-term results would continue to be pressured by headwinds from InstantBook (IB) as well as the continued shift in usage to mobile.

TripAdvisor's Q3

The comments follow TripAdvisor’s tepid third-quarter results, which came in below muted Street expectations. Though non-GAAP EPS of $0.53 topped estimates by a penny, revenue of $421 million missed FactSet’s consensus estimate of $437 million and $114 million EBITDA also fell short of consensus view of $124 million.

The core hotel segment revenue fell 6 percent on a 10 percent decline in TripAdvisor-branded click/transaction-based revenue. Revenue/Hotel shopper also dropped 12 percent.

“While monthly trends in 3Q point to improving trends in monetization (revenue/hotel shopper), we expect the ongoing mix-shift to continue to weigh on the business performance near term,” analyst Naved Khan wrote in a note.

Further, TripAdvisor expects lower EBITDA margins in 2017 as it increases its advertising spend to drive hotel shopper growth.

Analyst's Reactions

As such, Khan cut his fourth quarter revenue/EBITDA/NEPS views to $329 million/$85 million/$0.34 from $353 million/$90 million/$0.36, respectively.

Khan also cut his FY16 revenue/EBITDA/NEPS estimates to $1.493 billion/$379 million/$1.57. Earlier, the analyst expected $1.542 billion in revenue, $409 million in EBITDA and $1.67 in NEPS.

Further, the analyst trimmed his price target to $60 from $67 as he “opt to remain on the sidelines given the execution risks associated with business' transition.”

Khan has a Hold rating on the stock, which is currently down 0.91 percent at $52.14.