Shares of Expedia (EXPE) - Get Report were falling Friday after analysts at UBS downgraded the stock to neutral from buy on concerns about the coronavirus pandemic's lasting effect on consumer habits.
Analysts at the firm said the online travel company's risk profile isn't as "compelling at current stock price levels as it was in the March to May timeframe."
Despite the bearish outlook, UBS raised Expedia's price target to $116 from $84 though travel demand "remains depressed" with only a "gradual recovery" ahead for the travel industry.
"Based on our analysis, coupled with the uncertain demand environment, we do not believe the risk/reward for both EXPE & BKNG are as compelling at current stock price levels as it was in the March to May timeframe," said analysts at UBS.
"Said differently, we don’t believe the implied annual return on a normalized valuation has enough outsized skew to the upside in the current environment where uncertainty around pace and shape of the recovery in global travel demand remains elevated," UBS said.
Expedia shares were falling 2.3% to $95 on Friday.
Earlier this year, Expedia sold a $1.2 billion stake to private-equity firms Apollo Global and Silver Lake as the company looked to raise new capital ahead of the coronavirus pandemic lockdown.
The two firms provided "anchor funding" for Expedia in the form of perpetual preferred shares with a plan to raise another $2 billion in debt.