Expedia (EXPE) Management Sandbagging Benefit of Homeaway Deal - Piper Jaffray

Expedia (NASDAQ: EXPE) is acquiring HomeAway for $3.9B or $38.31 in a combination of cash & stock. Expedia indicated that it expects HomeAway to add $350M of EBITDA to the model in 2018 but with HomeAway's recently announced a 6% traveler booking fee that may prove to be conservative.

Based on the growth of Airbnb, HomeAway and other competitors in the space in recent years, travelers are increasingly looking at alternative accommodations (vacation rentals, apartments, shared spaces, etc) as an option for travel.

Mike Olson from Piper Jaffray believes the addition of HomeAway's inventory of approximately 1.2M vacation rental properties is highly synergistic with Expedia's existing hotel offering and will materially extend the booking volume for property owners. Additionally, he believes that the traveler booking fee has the potential to add >$1b in annual revenue by 2018.

The analyst maintained his Neutral rating and $130 PT but also notes that he has not incorporated Homeaway into EXPE estimates.

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 $133.32 yesterday.

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