Expedia (EXPE) PT Raised to $130 at RBC Capital on eLong Stake Sale

RBC Capital analyst Mark Mahaney raised his price target on Outperform-rated Expedia (NASDAQ: EXPE) to $130.00 (from $120.00) after the company announced that it sold its 62.4% share of eLong to a number of China-based buyers, including competitor Ctrip, in which Priceline has a minority stake. The selling price was $671MM, or $29.27 / ADR, representing a 42% premium to yesterday’s closing price.

"We view this sale as logical given the continued losses at eLong and its weakening position in the highly competitive Chinese domestic market, where Expedia has less expertise. In our view, the sale will enable EXPE management to focus on the areas where it has greater experience: the core OTA business (including the integrations of Wotif and closing of OWW), the Egencia corporate travel business, and meta-search engine Trivago. However, we do worry a bit about the long-term strategic loss of an asset in one of the fastest growing travel markets, China, which is also quite sizeable. Further, the sale may boost competitor Priceline’s position in the Chinese market through its minority ownership stake of Ctrip.

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

Shares of Expedia closed at $105.89 yesterday.

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