Ctrip.com (CTRP) Price Target Reduced to $59 at Goldman Sachs

Goldman Sachs maintained a Neutral rating on Ctrip.com (NASDAQ: CTRP) and lowered its price target to $59.00 (from $65.00). The change follows Q3 results, which were below expectations.

Analyst Fei Fang said, "Management guided 4Q non-GAAP operating margin to negative 15%, implying 35pp yoy contraction. We attribute 19pp of the decline to product development, and 11pp to marketing expense. We expect four main sources of spending: (a) bigger headcount to support product coverage, i.e. hotel, transportation, attraction sites in lower cities; (b) more aggressive rebates in response to intensified price competition; (c) branding; (d) other technology investments. Ctrip’s sustained technology & branding investments drove substantial volume gain on mobile, with the app’s accumulated downloads surpassing 350mn by 3Q. Mobile has become the primary booking channel for multiple business lines: 45% of Ctrip’s quarterly hotel volume came from mobile (versus 40% on PC, 15% call center), and 80% of the railway ticket plus 35% of the flight ticket bookings were also mobile-based."

"We expect bus & local attraction tickets to become incremental drivers that sustain mobile volume strength in 2015E. Management underscored the progress with open platform, which attracted over 1k hotel agency partners, China’s top 600 air-ticketing agencies, and over 800 local travel agencies. Ctrip reported over Rmb1bn transaction volume on the open platform in 3Q. International hotel volume grew 90% yoy despite headwinds in southeast Asia," added the analyst.

For an analyst ratings summary and ratings history on Ctrip.com click here. For more ratings news on Ctrip.com click here.

Shares of Ctrip.com closed at $58.46 yesterday.

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