Credit Suisse Downgrades TripAdvisor (TRIP) to Underperform; Deteriorating Earnings Profile

Credit Suisse downgraded TripAdvisor (NASDAQ: TRIP) from Neutral to Underperform with a price target of $34.00 (from $40.00).

Analyst Paul Bieber cited:

1) higher 2018 TV ad spend in our model (now $150mn vs. $115mn previously), resulting in a 10% decline in 2018 EBITDA and a likely a third consecutive year of declining EBITDA;

2) a difficult 3Q set-up that now requires 2H acceleration to meet TRIP's guidance of double digit clickbased and transaction revenue growth in 2017;

3) uncertainty regarding the return on TV advertising investment given that competitors are significantly outspending TRIP resulting in a crowded TV advertising market; and

4) a premium valuation vs. PCLN and EXPE despite a deteriorating earnings profile, inferior growth and the potential for eroding strategic asset value.

The firm is lowering 2018 EBITDA est. to $304.4mn (from $339.4mn) due to higher TV ad spend. They now expect 2017/2018 EBITDA of $315.8mn/$304.4mn vs. the Street at $330.1mn/$363.8mn. 2018 Non-GAAP EPS est. is now $1.05 vs. $1.23.

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 $37.91 yesterday.

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