TripAdvisor Has 'Compelling Path' To Top-Line Revenue Growth, Barclays Says In Upgrade

With TripAdvisor Inc TRIP’s fundamentals beginning to turn around, Barclays sees a “compelling path” to top-line revenue growth for the online travel agency.

The Analyst

Analyst Deepak Mathivanan upgraded TripAdvisor from Equal Weight to Overweight and raised the price target from $49 to $70.

The Thesis

Barclays has always found TripAdvisor’s value proposition and competitive positioning attractive, but remained “on the sidelines” about how the company would navigate monetization headwinds, Mathivanan said in the upgrade note. 

After a reset in the second half of 2017, TripAdvisor’s monetization rates seem on track to experience growth in the third quarter and will benefit from user experience improvements in mobile and desktop, the analyst said.

“We expect TRIP’s mobile traffic to soon inflect from being a headwind to a tailwind on overall monetization rates, as mobile overtakes desktop in hotel shoppers sometime in early 2019."

Despite Street concerns, TRIP could maintain or gain market share as ROIs improve, Mathivanan said. 

It is one of the few players with “meaningful” organic traffic and faces increasingly favorable secular trends, the analyst said.

Mathivanan said he expects the company’s non-hotel segment to evolve as a leader in the more than $100-million attractions market.

Price Action

TripAdvisor shares were trading up 1.6 percent to $58.51 at the time of publication Wednesday. 

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