RBC Capital analyst, Mark Mahaney, reiterated his Outperform rating on shares of Expedia (NASDAQ: EXPE) but cut his price target to $160.00 (from $165.00). Q2 results were 2%/4% below Street on Revenue/Bookings, but 12% above on EBITDA. Organic Room Night growth decelerated 12pts to 12% Y/Y, materially below expectations due largely to execution. With Orbitz integration largely done and ramping HomeAway results, fundamentals should improve 2H. Mgmt was cautious re: EU travel trends incrementally negative for Priceline (NASDAQ: PCLN) next week.

Keys to the quarter:

1) Weak Unit Growth– Organic Room Night growth decelerated 12-pts in Q2 (to 12%Y/Y) - about 2x the amount management had been expecting –due to ‘self-inflicted’ issues associated with the Orbitz integration and potentially competitive and/or macro headwinds

2) Organic Bookings Growth– Decelerated to 9% Y/Y vs. 12% Y/Y in Q1

3) Acquisitions Integrations Are Ahead of Plan– Mgmt commentary on the call was positive re: both Orbitz and HomeAway momentum, noting both are ahead of plan

4) HomeAway Ramping– Traveler fee has been rolled out in all major markets and. HA Revenue grew 36% Y/Y, with growth expected to accelerate in 2H16

5) EU Travel– Management noted France, Turkey and other EU "summer sun destinations” are down, largely due to terrorism. This is a negative data point for PCLN print next week.

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Shares of Expedia closed at $119.27 yesterday.