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Expedia Will Be The Online Travel Space's Outperformer This Earnings Season, Analyst Says In Preview

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Expedia Will Be The Online Travel Space's Outperformer This Earnings Season, Analyst Says In Preview
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With the online travel sector on deck to report earnings, D.A. Davidson is holding a bullish stance on just one of the stocks: Expedia Group Inc (NASDAQ: EXPE).

The Analyst

D.A. Davidson's Tom White:

  • Maintains a Buy rating on Expedia with an unchanged $132 price target.
  • Maintains a Neutral rating on Booking Holdings Inc (NASDAQ: BKNG) with an unchanged $2,260 price target.
  • Maintains a Neutral rating on Tripadvisor Inc (NASDAQ: TRIP) with an unchanged $46 price target.
  • Maintains a Neutral rating on Trivago NV - ADR (NASDAQ: TRVG) with an unchanged $7.30 price target.

Expedia

Expedia remains White's "preferred stock" in the OTA space, and the company should report a "solid" first quarter, the analyst said in a Monday report.

Expedia's Q1 accounts for just 10-12 percent of its full-year EBITDA, so the likelihood of a material negative surprise is "relatively low," White said. 

Beyond the Q1 print, CEO Mark Okerstrom's renewed focus on ramping the platform's international lodging supply is a key factor in supporting margin leverage over time, the analyst said. 

Booking Holdings 

Booking Holdings, formerly known as Priceline, should report a "solid" Q1, although there isn't sufficient conviction to turn bullish on the stock, White said. The company's challenges ahead of the print will likely continue throughout the year, the analyst said: 

A shift in the marketing mix toward "less accountable" brand and TV campaigns.

Competition from Expedia's "aggressive" international lodging supply push.

Booking's stock is trading at a "relatively full" valuation of 25x 2018E EPS, which is in the upper limit of its historical range, the analyst said. Investors are encouraged to wait for a better entry point to buy a "resilient grower and executor" in the OTA space, he said. 

Related Link: Argus: Booking Holdings Has 20% Upside Potential

TripAdvisor

TripAdvisor is offering investors "limited visibility" on the recovery in its core hotel segment, the analyst said. There are some signs of positive inflection, including CPC/pricing reaching "some sort of new equilibrium." But sustainable improvement is unlikely to be seen over the next quarter or so, according to D.A. Davidson. 

The company still boasts "interesting growth opportunities" in its premium listings and in its non-hotel segment, which includes tours and attractions, White said. Investors should wait for more "concrete signs" that TripAdvisor's core hotel business, which accounted for 77 percent of 2017 revenue, is returning to consistent growth, he said. 

Trivago

A sustainable improvement in Trivago's monetization landscape in the near-term is "unclear," White said. While the company's strategies moving forward "make sense," they are unlikely to show signs of success in the near term, he said. 

Trivago's move to aggressively engage smaller and regional online travel agencies on its platform could result in increased revenue quality, but it is not yet clear if Trivago can sustainably monetize the group at the high levels that larger brands are capable of, according to D.A. Davidson. 

Price Action

  • Shares of Expedia were up 0.35 percent at $110.78 at the close Tuesday. 
  • Shares of Booking Holdings were down 3.11 percent at $2,067.29. 
  • Shares of TripAdvisor were lower by 1.83 percent at $41.91. 
  • Shares of Trivago were down 2.6 percent at $6.38. 

Related Link:

DA Davidson Projects Increased Competition Between Expedia, Booking Holdings, Takes Neutral Stance On Trivago

Latest Ratings for EXPE

DateFirmActionFromTo
Oct 2018BarclaysMaintainsOverweightOverweight
Oct 2018Credit SuisseMaintainsOutperformOutperform
Oct 2018Deutsche BankMaintainsBuyBuy

View More Analyst Ratings for EXPE
View the Latest Analyst Ratings

Posted-In: DA Davidson monetizationAnalyst Color Price Target Reiteration Travel Analyst Ratings General Best of Benzinga

 

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