Bernstein reiterates Outperform rating on TripAdvisor stock with $20 target

Investing.com - Bernstein SocGen Group maintained its Outperform rating and $20.00 price target on TripAdvisor (NASDAQ:TRIP) stock, highlighting significant upside potential based on the company’s evolving business model. Currently trading at $16.72, InvestingPro analysis indicates the stock is undervalued, with positive earnings growth expected this year.

Analyst Richard Clarke noted that TripAdvisor has transformed beyond what many investors might remember, pointing out three key changes: it’s no longer a controlled company, it’s not dependent on Booking and Expedia, and most of its revenue doesn’t come from metasearch activities that compete directly with Google.

The firm emphasized that TripAdvisor now operates as a multi-brand company with over half its revenues coming from fast-growing segments with substantial total addressable markets, yet its current valuation still reflects perception as a declining legacy business.

Bernstein’s analysis suggests approximately 90% upside potential to the current share price based on a sum-of-the-parts valuation that conservatively values the Viator and TheFork businesses.

The firm believes investors can effectively purchase TripAdvisor for the value of Viator alone at a reasonable multiple, getting TheFork and the core TripAdvisor brand for just $90, representing only about one-third of their projected 2026 EBITDA.

In other recent news, TripAdvisor’s financial performance has been under scrutiny with mixed reactions from analysts. The company reported a 7% increase in revenue, alongside a 10% growth in EBITDA and a 17% rise in earnings per share for the second quarter. However, UBS noted that TripAdvisor’s consolidated revenue fell short of expectations by about $2 million, attributed to weakness in its Brand segment, though a significant margin improvement in its Viator business provided a boost to adjusted EBITDA. In response to these developments, UBS raised its price target for TripAdvisor to $19, maintaining a Neutral rating.

Meanwhile, CFRA adjusted its price target to $13 from $12, citing a revised earnings outlook but maintaining a Strong Sell rating. Mizuho initiated coverage with an Underperform rating, highlighting concerns over ongoing pressure on organic search traffic, which they believe will pose a long-term challenge. Bernstein reiterated an Outperform rating with a $20 price target, emphasizing the company’s solid financial performance and activist interest. Additionally, Bernstein sees artificial intelligence as a potential disruptor in the travel booking process, which could reshape the online travel agency landscape, impacting companies like TripAdvisor.

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