Is TripAdvisor Sandbagging Estimates for a Huge First-Quarter Earnings Beat?

TripAdvisor TRIP reported earnings after the close Wednesday, beating on the top and bottom lines, but managed to disappoint investors on its conference call, sending shares tumbling almost 10 percent. Leading into the earnings report, JG Capital reiterated its Overweight rating on the stock, stating that it believed earnings would be strong and that the company was the one of the best plays in the travel space. The report proved to be correct, but that didn't seem to help sentiment. In an effort to distract shareholders from the miss, the company announced a $250 million share buyback program, while naming a new chairman. Following the report, Morgan Stanley issued a downgrade on the company, sending it to an Equal-weight rating and a $42.00 price target. In the report the company stated that they were disappointed in the single digit revenue growth predicted for 2013, and that their thesis, which previously hinged on long term benefits of the stock, was being called into question. Later on, the report stated that, “we still think TripAdvisor is one of the best-positioned companies in the online travel space; however the near term uncertainty and the recent run-up in the stock (+30 percent over the past three months) make us move to the sidelines. While Morgan Stanley was backing off on the hot stock, Monness Crespi Hardt was quick to jump on board, issuing an upgrade to Buy while announcing a $60 price target. The upgrade was predicated on the fact that the company believes TripAdvisor's guidance is excessively conservative, setting up the company for a series of beats in the coming future- similar to how Apple AAPL used to consistently guide 20 percent below what the actual EPS figure ended up being. The report also stated that the company is expected to raise its guidance in the near future, which should send shares skyrocketing. Following the earnings release report, shares dropped as low as $41.40 in post-market trading, but have since hovered around $43.60 today, down roughly seven percent.