Market Overview

Analyst Breaks Down United's Contract Dispute With Expedia

Analyst Breaks Down United's Contract Dispute With Expedia

Online travel agency Expedia Group Inc (NASDAQ: EXPE)'s distribution deal with United Continental Holdings Inc (NASDAQ: UAL) will end at the end of September, but the financial impact to Expedia will likely be "modest."

The Analyst

Guggenheim Partners' Jake Fuller maintains a Buy rating on Expedia with an unchanged $162 price target.

The Thesis

United gave Expedia notice in February it plans on suspending ticket sales for flights departing after the existing contract ends on Sept. 30, Fuller said in a research report. It's not yet clear if United will "walk away" from Expedia's platform or if it is "playing hardball" to renegotiate better terms.

United accounts for around 15 percent of the domestic air market, so Fuller says it might be reasonable to assume United accounts for 15 percent of Expedia's U.S. ticket volume which is estimated at 56.6 million tickets in 2018. The math behind the assumption translates to Expedia selling 8.5 million United flight tickets, or $2.8 billion of bookings.

Expedia's take is likely $10.56 in revenue per ticket sold, or $90 million in revenue. The analyst says this translates to 0.8 percent of Expedia's total global revenue, which is "modest."

Headlines could prove to be a "sentiment drag" on Expedia if the contract expires without renewal. However, the financial exposure is modest and the online travel agency managed to resolve disputes fairly quickly.

Price Action

Expedia's stock closed Wednesday at $124.16 per share.

Related Links:

Sell-Side Lifts Expedia Price Targets After Strong Q4 Report, 2019 Outlook

Expedia's Million-Property Portfolio Drives Bullish Guggenheim Thesis

Latest Ratings for EXPE

May 2019DowngradesBuyNeutral
May 2019DowngradesBuyHold
May 2019AssumesHold

View More Analyst Ratings for EXPE
View the Latest Analyst Ratings

Posted-In: Guggenheim Partners Jake Fuller Online Travel Agency OTAAnalyst Color Travel Analyst Ratings General Best of Benzinga


Related Articles (EXPE + UAL)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

American Homeowners Are On The Move

Bed Bath & Beyond Falls Following Q4 Earnings, Lower Guidance