Flying High: Goldman's Noto Raises Estimates for Expedia, Travelocity

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After getting bashed for months as part of the Internet stock collapse, Web-based travel companies are making a serious case that real business can be done in cyberspace.

Goldman Sachs

analyst Anthony Noto sees possible continued upside to

Expedia

(EXPE) - Get Report

and

Travelocity.com

(TVLY)

, despite massive run-ups this year, and he raised his estimates on both stocks this morning. Earlier this month, the analyst upped his forecast for

priceline.com

(PCLN)

.

Travelocity has gained 147% year to date, while Expedia is up 329%. priceline has soared 468% since the start of the year. "We recommend buying on weakness despite significant appreciation YTD given earnings visibility," Noto wrote in a research note.

The analyst raised his estimates for the current quarter on Expedia to 14 cents a share from 8 cents and on Travelocity to 6 cents a share from 4 cents. Previously, Noto raised priceline's estimate for the current quarter to 3 cents a share from 2 cents, which he acknowledged maintaining in today's note.

Citing the slowdown in business as reducing demand for business travel, Noto figures that online travel companies will have a bigger inventory to sell as a result of fewer direct purchases of airline seats. "We believe these companies are benefiting from the unique conditions for airlines and hotels as the steep decline in business travel demand is resulting in greater supply for the online travel companies, which, combined with solid leisure demand from consumers, should result in strong revenues," Noto wrote.

Shares of Expedia were trading up 2.3% to $42.10 recently, a new 52-week high. priceline gained 6.6% to $7.92, but Travelocity slipped 0.5% to $29.85.