Shares of online travel booking company TripAdvisor (TRIP) - Get TripAdvisor Inc. Report jumped more than 10% Friday as the prospect of a recovery in the travel sector rises with increased coronavirus vaccine distribution.
Analysts at Deutsche Bank raised their price target on the company to $36 from $21 per share given the company's direct exposure to a travel recovery, which the firm envisions happening in the second half of the year.
TripAdvisor shares were rising 10.6% to $35.37 in afternoon trading Friday.
Deutsche Bank also sees potential opportunity in the company's newly-launched TripAdvisor Plus service, which charges $99 a year for discounts on a host of hotels and attractions. Deutsche Bank cited estimates of European online travel firm eDreams reaching 2 million subscriptions by 2023.
"We ultimately believe the scale TRIP can achieve with this product will be dictated by the consumer value proposition, and as it stands right now, we aren't 100% clear on the multi-year [prospects]," said analyst Lloyd Walmsley, who maintained his hold rating on the stock.
Walmsley noted the service still needs some work.
"It appears to offer compelling discounts, in certain instances, but does not have a lot of depth, nor does it make it clear to users what exactly they will get consistently," Walmsley said.
But the firm does believe that in the future, the company could partner with hotels to provide subscribers with discount prices.
"We think there is a substantial opportunity here if TripAdvisor can execute on finding the right product/market fit with consumers and source inventory from hotels and OTAs [online travel agencies] willing to allow the company to provide heavy discounts to closed-group subscription users," Walmsley said.