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