U.S. markets closed
  • S&P 500

    +8.26 (+0.19%)
  • Dow 30

    +13.36 (+0.04%)
  • Nasdaq

    +49.09 (+0.35%)
  • Russell 2000

    +24.40 (+1.06%)
  • Crude Oil

    +0.49 (+0.70%)
  • Gold

    -16.90 (-0.89%)
  • Silver

    +0.02 (+0.07%)

    -0.0071 (-0.58%)
  • 10-Yr Bond

    +0.0030 (+0.21%)

    -0.0060 (-0.42%)

    +0.2870 (+0.26%)

    -485.67 (-1.37%)
  • CMC Crypto 200

    -17.62 (-1.87%)
  • FTSE 100

    +45.88 (+0.65%)
  • Nikkei 225

    -9.83 (-0.03%)

TripAdvisor: Post Pandemic, Many Challenges Await

  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
  • Oops!
    Something went wrong.
    Please try again later.

Positioned at the intersection of three ailing industries virtually decimated by the pandemic – travel, hotels, and restaurants – TripAdvisor (TRIP) hasn’t had, well, much to review in 2020. The market hasn’t been any more forgiving, and TRIP shares are down 33% year-to-date.

BTIG analyst Jake Fuller forecasts a bumpy road ahead for the online travel company, as he rates the stock a Neutral (i.e. Hold). (To watch Fuller’s track record, click here)

With all three pillars on which Trip’s business rests at a standstill during the viral outbreak, the company has taken measures to remain afloat.

It has reduced the headcount by 23%, while an additional 22% of employees have been furloughed. Costs have been slashed by a further $45-65 million, pay and hours reduced by roughly 20% and the company has taken on a $700 million loan. Fuller estimates TRIP will see out the year with more than $550 million of cash.

Looking at the near term, the figures provide no comfort. The company has indicted that in the latter half of March, revenue dropped by over 90%. Hardly a surprise, with restaurant reservations and hotel bookings hovering slightly above zero.

Fuller expects 2Q revenue to be down by 90-95%. Following “aggressive cost cuts,” and a halt on marketing, the analyst believes TRIP will report an EBITDA loss of between $85-90 million for the quarter.

There’s more uncertainty further down the line, as apart from competitive concerns, Fuller crosses out the likelihood of a v-shaped recovery.

Fuller opined, “It is hard to say what recovery might look like. We default to a U-shape given the economic fall-out, second wave fears and distancing restrictions impacting flights, accommodations and events... As relates to metasearch and TRIP in particular, we see OTA advertisers de-emphasizing the channel and GOOG positioning as a disintermediation threat. We also note that a pivot towards experiences and dining holds promise, but we are not convinced in TRIP's ability to execute.”

That’s BTIG’s view, how about the rest of the Street’s? 6 buys, 2 Holds, and 1 Sell coalesce to a Moderate Buy consensus rating. Based on the $21.48 average price target, the analysts expect TRIP shares to decline by a modest 3%. (See TRIP stock-price forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

More recent articles from Smarter Analyst: