Expedia (EXPE) Flies Higher After Topping Analysts' Estimates, Analysts Raise Numbers and PT on 'Significant Outperformance'

May 7, 2021 10:40 AM EDT
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Price: $162.93 -1.8%

Rating Summary:
    25 Buy, 29 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 15 | Down: 13 | New: 24
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Shares of Expedia (NASDAQ: EXPE) are up 7% on Friday after the online shopping and travel company reported stronger-than-expected earnings on strong vacation and domestic travel demand.

EXPE reported a Q1 loss of $606 million, or $4.17 a share. On an adjusted basis, the loss came in at $2.02 per share to mark an improvement compared to the $1.83 recorded a year ago and $2.30 expected loss from the analysts.

Sales for the quarter slipped to $1.25 billion from $2.21 billion a year ago, but again higher than the $1.11 billion expected from market analysts.

“Travel remains a study in contrasts - with strong vacation rental growth and demand for domestic travel continuing to drive us forward, while demand for international and business travel and conventional lodging remain challenged. Beach and outdoor destinations have shown robust rebounds while major cities remain muted, and some regions have been growing while others remain locked down. As the vaccine rollout continues, we expect to see a now-familiar story play out; domestic and leisure demand lead the recovery,” Vice Chairman and CEO, Peter Kern, said.

However, Kern also noted a “dire situation in India” that signals a potential deterioration before things eventually get better.

“For our part, we continue to invest in bolstering our technology platform and in marketing where we can best get ahead of the demand curve. Because the market has clearly shown that when people feel safe to travel, demand comes roaring back.”

Wells Fargo analyst Brian Fitzgerald noted “significant outperformance across bookings, revenue, and EBITDA.” The analyst reiterated an “Overweight” rating on the stock and raised the price target to $235.00 per share.

“We believe EXPE's 1Q should push back on the bear-case narrative of BKNG gaining U.S. lodging share vs. EXPE. While neither company provided clear-cut disclosure on U.S. lodging, EXPE's worldwide lodging bookings grew in 1Q, while BKNG's declined (-5% YY per our estimates). In our view, it would be a mistake to view EXPE's narrowed focus (note Egencia sale to Amex GBT) as a sign of passivity, as EXPE appears to be ceding little on the marketing front, ramping spend ahead of demand (particularly in the back half of 1Q), investing strongly behind the Expedia/Vrbo brands and winning/poaching "Superhost" inventory to the Vrbo platform,” Fitzgerald writes in a note to clients.

BTIG analyst Jake Fuller highlights 3 takeaways from the Q1 earnings report.

1) Investors were talking about $14B+ in 1Q bookings and we thought that was crazy, but EXPE delivered $15.4B ($10.6B sell-side consensus;) and talked about April being >80% of 2019;

2) It's hard to really unpack the beat given limited product level detail, but it was likely lodging (maybe ~$10-12B of bookings) and VRBO (maybe 60%+ of lodging);

3) In any case, we pull recovery forward with 2H lodging bookings estimated at ~90% of 2019 (prior ~80%).

He hiked the price target to 210.00 per share on the Buy-rated Expedia stock.

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