Nomura Securities on U.S. Online Travel Agencies: Q2 Preview - EXPE and TRIP Standouts
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Price: $321.63 -0.78%
Rating Summary:
22 Buy, 37 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
22 Buy, 37 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on U.S. Online Travel Agencies: Q2 Preview
Analyst, Brian Nowak, said, "Expedia (Nasdaq: EXPE) and TripAdvisor (Nasdaq: TRIP) have been standouts year-to-date, beating the market by ~5,200bp (Expedia) and ~7,400bp (TripAdvisor). While estimates have risen, the companies’ forward multiples have also expanded, as Expedia’s has risen by 25% and TripAdvisor’s is up 42%, to a ~200% relative earnings multiple. This multiple expansion has been driven by various company-specific factors (including Expedia’s ability to take hotel room night share in the U.S. market and TripAdvisor dispelling doubts around their business model). We are encouraged by the EXPE room night trends, but maintain our Neutral rating until we can see further positive revisions and evidence that the coming Expedia.com improvements can be incremental and not substitutive against the Hotels.com improvements. We see TRIP numbers going higher, but with the stock trading at 24X our 2013 EPS estimate, struggle to find further (material) upside to numbers to justify a more positive rating. We therefore maintain our Neutral rating with a new $46 target price.
Expedia: Price Target raised from $37 to $50; 2012 EPS from $2.85 to $2.79, 2013 EPS from $3.62 to $3.52.
TripAdvisor: Price Target from $34 to $46; 2012 EPS from $1.59 to $1.62, 2013 EPS from $1.84 to $1.88.
Analyst, Brian Nowak, said, "Expedia (Nasdaq: EXPE) and TripAdvisor (Nasdaq: TRIP) have been standouts year-to-date, beating the market by ~5,200bp (Expedia) and ~7,400bp (TripAdvisor). While estimates have risen, the companies’ forward multiples have also expanded, as Expedia’s has risen by 25% and TripAdvisor’s is up 42%, to a ~200% relative earnings multiple. This multiple expansion has been driven by various company-specific factors (including Expedia’s ability to take hotel room night share in the U.S. market and TripAdvisor dispelling doubts around their business model). We are encouraged by the EXPE room night trends, but maintain our Neutral rating until we can see further positive revisions and evidence that the coming Expedia.com improvements can be incremental and not substitutive against the Hotels.com improvements. We see TRIP numbers going higher, but with the stock trading at 24X our 2013 EPS estimate, struggle to find further (material) upside to numbers to justify a more positive rating. We therefore maintain our Neutral rating with a new $46 target price.
Expedia: Price Target raised from $37 to $50; 2012 EPS from $2.85 to $2.79, 2013 EPS from $3.62 to $3.52.
TripAdvisor: Price Target from $34 to $46; 2012 EPS from $1.59 to $1.62, 2013 EPS from $1.84 to $1.88.
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