NEW YORK (TheStreet) -- Shares of Orbitz Worldwide (OWW) were down 2.19% to $11.15 in pre-market trading on Tuesday as the online travel booking site gets hit with a downgraded by analysts at UBS this morning.
Orbitz had its rating lowered to "sell" from "neutral" on antitrust concerns.
UBS analysts think Expedia's (EXPE) proposed acquisition of the travel website operator may not gain approval by regulators.
Chicago, Ill.-based Orbitz Worldwide is a global online travel company that uses technology to enable leisure and business travelers to research, plan and book a range of travel products and services.
Separately, TheStreet Ratings team rates ORBITZ WORLDWIDE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ORBITZ WORLDWIDE INC (OWW) 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 revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OWW's revenue growth trails the industry average of 18.8%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $165.19 million or 5.57% when compared to the same quarter last year. Despite an increase in cash flow, ORBITZ WORLDWIDE INC's cash flow growth rate is still lower than the industry average growth rate of 40.61%.
- The gross profit margin for ORBITZ WORLDWIDE INC is rather high; currently it is at 67.08%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, OWW's net profit margin of -9.50% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio is very high at 7.52 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, OWW has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market on the basis of return on equity, ORBITZ WORLDWIDE INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: OWW Ratings Report