The shares of online travel agency Expedia (EXPE) are rallying after Piper Jaffray analyst Michael Olson upgraded his rating on the stock to Overweight from Neutral. The company should benefit from its acquisition of HomeAway ,while its core website is “performing well,” the analyst stated.
WHAT’S NEW: HomeAway’s EBITDA contribution to Expedia should exceed Expedia’s guidance of $350M in 2018, driven by HomeAway’s new guest booking fee, Olson believes. Meanwhile, Expedia’s marketing investments leave it well-positioned to take share from smaller OTAs and hotel websites, the analyst stated. Olson raised his price target on Expedia to $140 from $130.
WHAT’S NOTABLE: On February 22, Scott Devitt, an analyst at research firm Stifel, downgraded his ratings on Expedia and Tripadvisor (TRIP), another OTA, to Sell from Hold. As reasons for the downgrades, Devitt cited moderating economic trends in the U.S. and globally, along with increased efforts by hotels to cut out the OTAs and the consolidation of the U.S. hotel sector.
PRICE ACTION: In morning trading, Expedia rose 4.7% to $110.60.
