- Oops!Something went wrong.Please try again later.
Shares of online travel agency Expedia scaled to a new record high in pre-market trading on Friday as several equity analysts raised their price targets after the company beat earnings estimates for the fourth quarter.
Bellevue, Washington-based company reported quarterly adjusted earnings of $1.06 per share, beating the Wall Street consensus estimates of $0.69 per share. The company revenue jumped over 147% to $2.28 billion from a year earlier. But that missed the market expectations of $2.30 billion.
This was largely attributable to a robust holiday travel season, despite the threat of the Omicron Covid-19 variant. The company’s net income was $276 million, compared with a loss of $412 million a year earlier.
“Like its third quarter, Expedia’s fourth-quarter demand was dampened by coronavirus variants, but management once again offered encouraging commentary on the outlook, sending shares up 5%. We plan to adjust our $165 fair value estimate up by a mid-single-digit percentage, to account for lower U.S. tax rate, time value of money, and slightly faster demand recovery in 2022,” Dan Wasiolek, Senior Equity Analyst at Morningstar.
“While we maintain our long-held view that the desire to travel will drive a full recovery from the April 2020 nadir of the pandemic, with Expedia’s network advantage (source of its narrow moat) positioned to benefit, we see shares as overvalued. To this point, Expedia shares trade above 14 times and 30 times forward EV/EBITDA and earnings per share, respectively, above the 10-11 times and 20 times awarded in the years preceding the pandemic.”
Expedia stock hit an all-time high of $205.50, rising over 4% in pre-market trading on Friday. The stock rose nearly 5% so far this year after surging about 8% in 2021.
Several analysts have also updated their stock outlook. RBC raised the target price to $200 from $180. Evercore ISI lifted the target price to $238 from $176. Piper Sandler upped the target price to $231 from $216. BTIG increased the target price to $235 from $200.
“We see a favourable EXPE risk/reward given our expectation for a U-shaped room night decline and recovery as we see online travel room night growth returning to positive growth in ’21. We are bullish about EXPE’s recent strategic investments to increase its global property supply, invest in VRBO, and improve performance marketing and see these leading to faster long-term room night growth,” noted Brian Nowak, equity analyst at Morgan Stanley.
“While these investments are likely the correct long-term strategies for growth, we see higher execution risk, longer payback and more near-term margin pressure.”
Expedia Stock Price Forecast
Eleven analysts who offered stock ratings for Expedia in the last three months forecast the average price in 12 months of $194.27 with a high forecast of $216.00 and a low forecast of $155.00.
The average price target represents a -1.65% change from the last price of $197.52. Of those 11 analysts, four rated “Buy”, seven rated “Hold”, while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $200 with a high of $260 under a bull scenario and $130 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the travel agency company’s stock.
Technical analysis suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator giving a strong buying opportunity.
Check out FX Empire’s earnings calendar
This article was originally posted on FX Empire