On Friday, BTIG, a financial services firm, increased the price target for Expedia Group Inc. (NASDAQ:EXPE) sharesto $175 from $150 while maintaining a Buy rating. The revision reflects the company's robust performance and positive outlook.
Expedia's stock has experienced a significant rally since early August, prompting the analyst at BTIG to re-evaluate the previous price target. Despite the recent gains, Expedia continues to trade at a discount compared to its pre-pandemic valuation, with current multiples at 7 times EBITDA versus the 10 times seen before the outbreak of COVID-19. The analyst highlighted that Expedia is now a stronger company, with similar growth rates and higher profit margins than before.
The travel sector faced uncertainty following guidance cuts during the second quarter earnings season, raising concerns about the future of travel demand. However, subsequent checks have revealed stable to improving trends from July onwards. This suggests that Expedia's third-quarter performance is expected to align with forecasts.
Looking at the broader picture, BTIG views Expedia as an underappreciated earnings compounder. The firm anticipates a compound annual growth rate (CAGR) of over 20% for Expedia's earnings per share (EPS) from 2024 to 2026. This positive outlook is supported by Expedia's substantial free cash flow and its commitment to returning capital to shareholders through buybacks.
In other recent news, Expedia Group Inc. has seen a shift in its stock rating as TD Cowen changed its stance from "Buy" to "Hold," citing concerns over the company's underperforming business-to-consumer (B2C) sector. In contrast, the company's business-to-business (B2B) segment has been performing well, marking $25 billion in bookings and over $100 million in room nights in 2023.
Expedia's Vice Chairman, Peter Kern, has also stepped down from his role and the Board of Directors, with no further details disclosed regarding a replacement.
Analysts from Truist Securities and Cantor Fitzgerald initiated coverage on Expedia with a "Hold" and "Neutral" rating respectively, while B.Riley sustained its "Buy" rating, expressing optimism for the company's B2B offerings.
Expedia's One Key loyalty program, which aimed to tie together Expedia, Hotels.com, and Vrbo in the US, has been paused internationally for reevaluation. These are the recent developments in the company.
InvestingPro Insights
Following BTIG's optimistic outlook on Expedia Group Inc. (NASDAQ:EXPE), InvestingPro data further enriches the narrative of the company's financial health and market position. Expedia's market capitalization stands at a robust $19.33 billion, and the company has been demonstrating impressive gross profit margins, with the last twelve months as of Q2 2024 showing a margin of 88.9%. This aligns with BTIG's view of Expedia's increased profitability post-pandemic.
Moreover, Expedia has shown a strong return over the last three months, with a price total return of 19.11%, which might interest investors looking for short-term gains. While the stock is currently trading at a high P/E ratio of 25.03, it's worth noting that the adjusted P/E ratio for the last twelve months as of Q2 2024 is lower at 15.33, suggesting a potential normalization in valuation over time. Additionally, InvestingPro Tips indicate that management has been aggressively buying back shares, which is often a sign of confidence in the company's future and can be a catalyst for stock price appreciation.
For those interested in further insights, there are over 11 additional InvestingPro Tips available for Expedia, which can provide a deeper understanding of the company's financial nuances and market behavior. As an investor, staying informed with comprehensive data and expert analysis, like that offered by InvestingPro, can be crucial in making well-informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.