BofA/Merrill Lynch Downgrades TripAdvisor (TRIP) Two-Notches to Underperform

BofA/Merrill Lynch downgraded TripAdvisor (NASDAQ: TRIP) from Buy to Underperform with a price target of $81.00 (from $120.00) following Q3 results.

Analyst Nat Schindler noted that the operating expenses, particularly on media, overwhelmed superficially strong revenue. The analyst also noted that EBITDA margin hit a record low at just 34% as the company invests in TV ad spend while showing virtually no leverage on R&D and G&A. "This spend is likely to continue as the company ramps employees (up 40% y/y) and continues to fight to gain users," Schindler said.

The firm cut FY 2014 EPS from $2.13 to $1.94, FY 2015 EPS from $2.94 to $2.54 and FY 2016 EPS from $3.99 to $3.24.

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 $83.79 yesterday.

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