The Shanghai-based Internet travel company announced on Tuesday that it is authorized to invest $1.3 billion in cash in several non-U.S. investment entities that operate in China, which will acquire a "significant minority stake" in Qunar Cayman Islands (QUNR).
Ctrip will eventually control an estimated 80% to 90% of Qunar as a result of the investments, Oppenheimer said. Both companies are projected to hold 21% of China's travel market, the firm added.
"Therefore, we believe Ctrip is fully entrenched as the access point to leverage China's growing travel market, which in our view, is further validated by Priceline (PCLN)/Expedia (EXPE) inventory partnerships."
The firm lowered the stock's price target due to the dilutive impact to Ctrip's American Depository Shares after the company's investments complete.
Ctrip stock is up by 1.86% to $42.01 in pre-market trading on Thursday.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CTRIP.COM INTL LTD as a Buy with a ratings score of B. COM INTL LTD (CTRP) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, solid stock price performance and compelling growth in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CTRP's revenue growth has slightly outpaced the industry average of 38.2%. Since the same quarter one year prior, revenues rose by 44.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 850.00% and other important driving factors, this stock has surged by 97.33% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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 exceeds that of both the industry average and the S&P 500.
- The gross profit margin for CTRIP.COM INTL LTD is currently very high, coming in at 73.42%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 75.90% significantly outperformed against the industry average.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 975.2% when compared to the same quarter one year prior, rising from $35.34 million to $380.00 million.
- You can view the full analysis from the report here: CTRP