UBS Cuts Estimates on TripAdvisor (TRIP) Following 4Q
UBS reiterated a Neutral rating on TripAdvisor (NASDAQ: TRIP), and cut the price target to $68.00 (from $80.00), following the company's 4Q earnings report. TripAdvisor's Q4 results supported both the bear and bull arguments. UBS' new Q1 2016 estimates include revenues of $374mm (from $381mm), adjusted EBITDA of $106mm (from $117mm), and adjusted EPS of $0.44 (from $0.50).
Analyst Eric Sheridan commented, "TripAdvisor's Q4 results supported both the bear (weak revenue per hotel shopper from CPC pressures & ongoing dilution from Instant Booking [IB]) & bull (conversion on IB improved throughout 2015 and is now comparable to metasearch, with commentary suggesting room for further improvement ahead) arguments. In the near-medium term, the case remains that metasearch (which we believe monetizes at ~14-15%) is a higher monetizing platform than IB (partners are paying double-digit commissions on average, at the same conversion). To reach revenue parity, TripAdvisor would need to see a further ~20-30%+ improvement in conversions within the IB path (which in theory is certainly possible given TripAdvisor's pricing, selection, & content advantages). For now, the accelerated global rollout of IB will pressure reported revenues, and when combined with still strong expense growth, EBITDA ests come down. We maintain our Neutral rating, searching for added signs of further conversion improvements."
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Shares of TripAdvisor closed at $61.07 yesterday.