On Friday, BMO Capital Markets updated its outlook on Expedia Group Inc. (NASDAQ:EXPE) shares, raising the price target to $165 from the previous $145 while maintaining a Market Perform rating on the stock. The revision reflects Expedia's sustained operational success, particularly with its Brand Expedia segment, which has reported mid-teens growth in the third quarter of 2024 compared to 20% in the second quarter of the same year.
The analyst from BMO Capital Markets acknowledged the challenges faced by Hotels.com, noting that the platform could struggle to achieve a positive turnaround amidst an increasingly competitive environment. Despite this, the improved performance of Brand Expedia has prompted a more optimistic projection for the company's future financials.
The updated analysis includes an expectation that incremental costs associated with Vrbo and Hotels.com could balance out the favorable Gross Bookings trends anticipated for the year 2025 and onwards.
The firm has adjusted its forecast for Expedia's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year 2025, increasing the estimate to $3.1 billion from the previous $3 billion, while predicting that EBITDA margins will remain stable.
BMO Capital's report suggests that while Expedia is navigating through a mix of growth and challenges across its various platforms, the overall trajectory for the company's financial health appears to be positive. This is reflected in the raised price target, which signals a belief in the company's ability to maintain its current growth pace despite the potential headwinds it may face.
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