NEW YORK (TheStreet) -- Shares of TripAdvisor Inc. (TRIP) are plunging -10.21 to $96.40 in pre-market trading as the travel research company was downgraded to "hold" from "buy" at Cantor Fitzgerald today.
The firm cited the company's valuation following mixed second quarter results, reported after yesterday's close, as a reason for the cut in rating, but kept its price target of $94.
TripAdvisor posted second quarter non-GAAP net earnings of $81 million or 55 cents per diluted share, up 7% year-over-year, but missing analysts estimate of 61 cents per share.
The company reported revenue of $323 million, up 31% from $247 million in the same quarter in 2013, beating analysts consensus estimate of $321.8 million.
Separately, TheStreet Ratings team rates TRIPADVISOR INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRIPADVISOR INC (TRIP) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and growth in earnings per share. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 22.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 65.57% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Despite currently having a low debt-to-equity ratio of 0.38, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that TRIP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.13 is high and demonstrates strong liquidity.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, TRIPADVISOR INC's return on equity exceeds that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Internet & Catalog Retail industry average, but is greater than that of the S&P 500. The net income increased by 9.2% when compared to the same quarter one year prior, going from $62.30 million to $68.00 million.
- You can view the full analysis from the report here: TRIP Ratings Report