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Expedia Shares Gain 4% Following Analyst Upgrade, Quarter Optimism

Erika Janowicz

Shares of Expedia (NASDAQ: EXPE) are up about four percent following Susquehanna's upgrade and bullish remarks from FBR Capital Markets.

Susquehanna Notes Business Improvements

Susquehanna analyst Brian Nowak upgraded shares from Neutral to Positive and raised the price target from $79.00 to $90.00. Nowak sees Expedia's three main segments of Travelocity, Trivago and the core business improving.

The analyst remarked that Trivago's traffic if growing 85 percent year-over-year and continues to accelerate. Susquehanna added that Travelocity's traffic conversion is also “materially improving” after the migration to Expedia's platform.

Nowak expects Expedia's core business to see 2014 and 2015 EBITDA growth of eight percent and 10 percent, respectively.

Expedia Remains Top Pick

In a note published Tuesday, FBR analyst Jake Fuller reiterated an Outperform rating and $85.00 price target on Expedia, emphasizing a healthy quarter outlook from solid domestic room night growth. Fuller noted U.S. room nights rose 30 percent in May and 33 percent for the quarter to date.

The analyst added that domestic airline ticket volume for the company is up 34 percent quarter-to-date and “Pending June data, Expedia should be on track to show 30% to 35% domestic bookings growth in 2Q versus a consensus in the 25% range.”

FBR concluded that Expedia remains the firm's Top Pick.

Fuller commented, “we point to three themes: (1) We continue to see evidence of near-term momentum in the business as we move into a period of easy comps; (2) commentary on the 1Q earnings call indicates Expedia's focus is shifting toward expanding the hotel base, and we see that as a material new leg to the story; and (3) at just 9x 2015 EBITDA, we consider the valuation to be compelling.”

Stock Action

Shares of Expedia closed Monday at $74.58. The stock traded as high as $77.76 in Tuesday's trading, up 4.264 percent. Shares are currently up 4.04 percent at $77.59.

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