Bernstein on TripAdvisor (TRIP): 'The Stock Is Simply Too Cheap'

Bernstein SocGen Group analyst Richard Clarke reiterated an Outperform rating and $20.00 price target on TripAdvisor (NASDAQ: TRIP).

The analyst commented: "Today, Starboard, an $8.5bn activist fund, confirmed they had taken a 9% stake in Tripadvisor worth $160m. Starboard has taken previous investments in tech platforms such as eBay, Match.com and Wix. Starboard has only so far said they consider the stock is “undervalued”, so we look into what might be the activist angle?

The stock is simply too cheap … the first angle is likely that at 6x PE (pre Starboard investment) the stock is simply too cheap for a growing profitable platform. The stock is likely simply off the radar for many investors, well demonstrated by Starboard buying a 9% stake with little impact, and simply raising the profile should help the shares. Overall the stock should grow well as Viator and The Fork become bigger shares of the business but there are shorter term unlocks: (1) the turnaround of brand Tripadvisor - which management has suggested for 2026 and would show that investors are not risking ongoing deleverage- meaning there is no offset to the solid growth of Viator and the Fork, and (2) ongoing buybacks, with the company suggesting it can return FCF to shareholders - our FY26 FCF is 19% of yesterday’s market cap, implying it is capable of material buybacks. Such is the level of buybacks and compounding share shrink that we forecast ~50% EPS growth in FY28 if the current price holds."

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

Shares of TripAdvisor closed at $17.50 yesterday.

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