Raymond James Struggles To Understand Why Bears Target Tripadvisor

The bearish case for Tripadvisor Inc TRIP is difficult to understand, especially with the stock trading at 14 times 2019 estimated EV/EBITDA, according to Raymond James.

The Analyst

Raymond James analyst Justin Patterson maintains a Market Perform rating on Tripadvisor with no price target.

The Thesis

The Street's expectations for the online travel company is "not demanding" but the company's metrics aren't as bad as it seems and the company has some growth prospects, Patterson said in a research report.

The company is seeing a shift in traffic away from "lookers" and more towards "bookers." This is evident in Revenue Per Hotel Shopper falling by 1 percent year over year in 2018. If the platform was attracting poor quality visitors, then monetization should have contracted a lot more than just 1 percent.

Tripadvisor has an opportunity to improve its platform that's under-monetized compared to its peers. The company can consider new ad products, improvements to measurement and attribution, along with engaging advertisers. Management is believed to be in the early stages and updates are likely to be presented throughout the year.

Despite a "struggle" to understand the bear thesis, Patterson said a bullish stance on the stock can't be justified. The travel company continues to face macro-related concerns and is unlikely to see notable upside absent any large upward revisions to estimates.

Price Action

Shares of Tripadvisor were trading higher by 1.1 percent to $51.83 Friday afternoon.

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