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Expedia (EXPE) Shares Gain on Morgan Stanley Upgrade to Overweight

January 11, 2018 10:18 AM

Shares of Expedia (NASDAQ: EXPE) rose over $2.00 or roughly 1.5% to $129.30 Thursday morning following an upgrade from Morgan Stanley to Overweight (from Equal-weight) with a price target of $160.00 (from $170.00).

Analyst Brian Nowak is positive on management’s efforts to drive accelerated growth as he remains bullish on the online travel company. The analyst feels justified in his premium valuation given Expedia's potential for stronger room night & free cash flow growth.

Nowak comments "We are bullish about EXPE's recent strategic investments to increase its global property supply, invest in AWAY, and improve performance marketing as we see these leading to faster long-term room night supply strategy leading to increased supply, better consumer selection and higher conversion and an improved ability to bid on keywords to drive new user growth."

Further he does not believe that the online travel model is broken as some have stated when citing ceilings on penetration, direct bookings, and Airbnb.

More importantly, Nowak sees room for leisure online hotel penetration to accelerate to 50% by 2019.

His target of $160.00 is 25% above Wednesday's closing price of $127.18.

StreetInsider Premium first published a variation of this article on January 10th at 4:14PM ET. Try StreetInsider Premium for two weeks free here.

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