Expedia Share-Price Targets Travel Higher After Earnings Report

Several Wall Street analysts raised their share-price targets on the online-travel company Expedia, seeing strength in the company's core operations.
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Expedia Group (EXPE) - Get Report shares took off as analysts increased their target prices for the stock after the online travel company issued a strong fourth-quarter-earnings report.

In the quarter Expedia earned $76 million, or 52 cents a share, quadruple the $17 million, or 11 cents, of the year-earlier quarter. Revenue rose 7% to $2.75 billion from $2.56 billion.

Gross bookings increased 6% to $23.25 billion, and stayed lodging room nights gained 11%. Expedia also forecast double-digit adjusted growth in earnings before interest, taxes, depreciation and amortization for 2020.

Barclays analyst Deepak Mathivanan affirmed an overweight rating on Expedia and raised his target price to $153 from $137. 

"The new leadership’s tone" on the earnings call "was positive and energized," the analyst wrote in a note. The "return of Barry Diller and Peter Kern feels like a harbinger for better execution and operational discipline in fiscal 2020." 

In early December Expedia's CEO and CFO stepped down in what the company said was disagreement with the board over strategy. Diller and Kern are chairman and vice chairman, respectively.

Lloyd Walmsley at Deutsche Bank affirmed a buy rating and $130 target. 

On the call management encouraged investors with the potential for double-digit Ebitda growth in 2020, “the lion's share of $300 million to $500 million run-rate cost savings being in place by [year’s end] and an increased willingness to repurchase shares,” the analyst wrote.

He did say management must “show quantifiable results quickly, which will likely be difficult” given the potential for a negative impact to Ebitda stemming from the coronavirus outbreak.

The Seattle company's operation “continues to be a share gainer globally with room-night growth” showing strength in the fourth quarter, Evercore ISI analyst Lee Horowitz wrote in a report, according to Bloomberg. The company is “setting a new bar,” he said.

Horowitz increased his price target on Expedia shares to $145 from $140. He has an outperform rating on the stock.

Morgan Stanley analyst Brian Nowak wrote in a report that Expedia’s cost savings will more than compensate for revenue lost to reduced performance marketing and problems stemming from the coronavirus, Bloomberg reports.

The company is dedicated to trimming fat, better utilizing data, using its assets more efficiently, decreasing spending on projects with low returns and returning capital to shareholders, he said.

Nowak boosted his share price target to $140 from $130. He has an equal-weight rating on the stock.

Also affirming a neutral stance is Wedbush's James Hardiman.

The analyst lauded management for providing “an honest conversation about the opportunities and threats facing the company, as well as [a] detailed admission of previous missteps.”

And he restored his 2020 Ebitda estimate to what it was before the coronavirus outbreak. He lifted his price target to $121 from $117, basing it on an unchanged estimate of 7.5 times Ebitda per share.

At last check, Expedia shares traded at $121.09, up 9.5%. They've traded today up as much as 13%. In 2020 through Thursday the shares had risen 2.2%.