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Analyst: Expedia Faces Cyclical Pressures In 2018

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Analyst: Expedia Faces Cyclical Pressures In 2018

Expedia Inc (NASDAQ: EXPE) shares are likely to be weighed down this year by pressures such as cyclical headwinds and increased competition from Airbnb, according to MKM Partners. 

The Analyst 

MKM Partners analyst Rob Sanderson maintains a Neutral rating on Expedia and lowered the price target from $115 to $101.

The Thesis

Online travel agencies maintain an important role in the travel ecosystem, but cyclical issues present a headwind in 2018 for Expedia, Sanderson said in a Wednesday note. (See the analyst's track record here.) 

"Hotel occupancy has been at record highs in the U.S. yet domestic room night growth has been disappointing against what were thought to be very easy comps," the analyst said. At the margin, Expedia's hotel room nights are being pinched by a "tight" supply environment, he said. 

Following a weak fourth-quarter report that sent shares to new 52-week lows, Expedia is ramping up its investment in marketing — which will likely weigh on EBITDA in the first quarter, Sanderson said. The entirety of Expedia's 6-to-11-percent EBITDA growth guidance is expected to come in the second half of the year, he said. 

Expedia is planning a major investment in supply, with the expectation of doubling the number of properties available on its core platform. This is seen as a defensive play in response to Airbnb’s recent announcement that it will open its platform to hotels, Sanderson said. 

Price Action

Expedia shares closed Wednesday down 1.07 percent at $102.99. 

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The Reward Outweighs The Risk In Expedia, Analyst Says

Latest Ratings for EXPE

DateFirmActionFromTo
May 2019DowngradesBuyNeutral
May 2019DowngradesBuyHold
May 2019AssumesHold

View More Analyst Ratings for EXPE
View the Latest Analyst Ratings

Posted-In: Airbnb MKM PartnersAnalyst Color Price Target Reiteration Travel Analyst Ratings General Best of Benzinga

 

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