NEW YORK (TheStreet) -- Ctrip.com International (CTRP - Get Report) shares are skyrocketing 23.51% to $91.82 on Monday after the online travel company announced that it will take a 45% stake and form a partnership with Baidu (BIDU)-controlled Qunar Cayman Islands (QUNR).
Under the all-share swap deal, Internet search giant Baidu will own 25% of Ctrip.com.
Both Ctrip.com and Baidu said they agreed to combine products and services.
"We are excited by this transaction, which we believe will help build a healthy travel ecosystem in China," Ctrip.com CEO James Liang stated.
In addition, Goldman Sachs this morning gave Ctrip.com's ratings a boost to "buy" from "neutral" with a price target of $94, saying that the company will "benefit tremendously from industry consolidation," according to Barron's.com.
Separately, TheStreet Ratings team rates CTRIP.COM INTL LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate CTRIP.COM INTL LTD (CTRP) 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, feeble growth in the company's earnings per share and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CTRP's revenue growth has slightly outpaced the industry average of 46.3%. Since the same quarter one year prior, revenues rose by 46.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Compared to its closing price of one year ago, CTRP's share price has jumped by 27.31%, exceeding the performance of the broader market during that same time frame. Although CTRP had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- The gross profit margin for CTRIP.COM INTL LTD is currently very high, coming in at 71.11%. Regardless of CTRP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CTRP's net profit margin of 5.64% compares favorably to the industry average.
- CTRIP.COM INTL LTD reported flat earnings per share in the most recent quarter. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CTRIP.COM INTL LTD reported lower earnings of $0.21 versus $1.12 in the prior year. For the next year, the market is expecting a contraction of 5.7% in earnings ($0.20 versus $0.21).
- 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, CTRIP.COM INTL LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CTRP