U.S. Markets closed

Susquehanna Downgrades Expedia: 'It Could Take Several Quarters To Resolve These Issues'

Brett Hershman

Expedia Inc (NASDAQ: EXPE) shares were down at the end of Monday's session after Susquehanna dropped its bullish stance on the online travel agency. 

The Analyst

Shyam Patil downgraded Expedia from Positive to Neutral and lowered the price target from $170 to $141.

The Thesis

While he is still constructive on the long-term online hotels and alternative accommodations space, Patil said he does not see a catalyst to move Expedia shares higher and is not expecting upward estimate revisions in the near-term. (See the analyst's track record here.) 

“Moreover, EXPE is facing some challenges in one of its key growth drivers- Vrbo (formerly HomeAway), as the brand transition and SEO headwinds appear to be weighing on bookings growth; we believe it could take several quarters to resolve these issues." 

Shares are likely to remain rangebound in the nerm-term, Patil said.

Expedia reported first-quarter earnings last week, delivering mixed results that included a big sales miss.

Fortunately for the company, lower operating expenditures offset the revenue miss, and EBITDA of $176 million came in 28 percent above consensus estimates.

Room nights fell in-line, but softness at Vrbo introduces some uncertainty around the outlook, Patil said. 

“Looking ahead, EXPE appears constructive on the core lodging nights growth trajectory, but headwinds from the AWAY to Vrbo transition are likely to remain for the next couple quarters." 

Price Action

Expedia shares were down 2.37 percent at $124.09 at the time of publication Monday. 

Related Links: 

Guggenheim: If You Like TripAdvisor, You Might Also Like Trivago

Difference Of Opinion: Mizuho Initiates Trivago With Buy, JPMorgan Downgrades To Underweight

Latest Ratings for EXPE

Date Firm Action From To
May 2019 Downgrades Positive Neutral
Mar 2019 Upgrades Hold Buy
Jan 2019 Downgrades Overweight Equal-Weight

View More Analyst Ratings for EXPE
View the Latest Analyst Ratings

See more from Benzinga

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.