TripAdvisor Competitive Headwinds Aren't Dissipating

The weak fourth quarter results and the resultant outlook shows competing headwinds still persist for Tripadvisor Inc TRIP whose top as well as bottom line numbers for the quarter trailed estimates.

• TripAdvisor reports Q4 EPS of $0.16, missing by $0.15
• Sales came in at $316 million, missing by $10 million

Jed Kelly  of Oppenheimer maintained his Perform rating on shares, which have some downside risk protection from the pending large brand campaign.

TripAdvisor provided FY2017 EBITDA outlook of flat-to-down year-over-year, from competitive headwinds driving paid marketing initiatives that are expected to accelerate revenue but weigh on margins.

Related Link: Vetr Crowd Upgrades TripAdvisor

Furthermore, TripAdvisor is considering a large multi-year brand/television advertising campaign that is not yet reflected in FY2017's outlook, and would negatively impact near-term profitability.

“We believe a brand investment would assist in changing user behavior around Instant Booking (IB), represent a counter to aggressive advertising from competitors, and reduce Google exposure. Furthermore, potentially re-engaging in television represents improved user conversion, in our view,” Kelly wrote in a note.

Among the positives, January click-based transaction revenue accelerated to high single digits year-over-year with U.S. growing double-digits and fourth quarter revenue-per-hotel shopper declines moderated sequentially.

“We believe the main positive from 4Q results is click-based transaction revenue accelerating to 0% y/y in 4Q from -10% in 3Q, and growing to high single-digits in January from double-digit US growth on comping IB and improving revenue per hotel shopper trends,” Kelly added.

Aggressive marketing from competition isn't dissipating and investors would expect the company to ramp its upcoming multi-brand campaigning.

At last check, shares of TripAdvisor were down 5.83 percent to $49.63.