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On Friday, TD Cowen’s analyst Kevin Kopelman adjusted the price target on Expedia (NASDAQ:EXPE) stock, reducing it to $170 from a previous $180 while maintaining a Hold rating. The revision follows Expedia’s first-quarter performance, which saw a modest shortfall in top-line growth with gross booking value (GBV) and revenue increasing 4.3% and 3.4%, respectively. These figures were at the lower end of the company’s guidance, impacted by weaker performance in the US and business-to-consumer (B2C) transactions, with B2C transaction revenue falling by 3%. The company, currently valued at $19.75 billion, maintains impressive gross profit margins of 89.54%, according to InvestingPro data.
Expedia’s guidance for fiscal year 2025 estimates a GBV and revenue increase of 2-4%, which is approximately 2% lower than the prior forecast of 4-6%. This downward adjustment is attributed to underlying softness in the business, which has more than offset the benefits from foreign exchange rates, considering that approximately 65% of Expedia’s business is based in the US. InvestingPro analysis reveals that 11 analysts have recently revised their earnings expectations downward, though the stock appears undervalued based on InvestingPro’s Fair Value calculations. For deeper insights into Expedia’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Despite these challenges, Expedia’s estimated EBITDA for 2025 remains relatively unchanged due to a $75 million reduction in force (RIF) benefit. However, the slower trend has led to a 5% decrease in the projected EBITDA for 2026 and a 10% reduction in earnings per share (EPS) expectations.
The analyst’s commentary highlighted the slight underperformance in the first quarter, with Vrbo, Expedia’s vacation rental platform, only growing by an estimated 3%. The price target has been set at $170, which is based on 14.5 times the projected 2025 earnings per share.
In other recent news, Expedia Group Inc. reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $0.40, which surpassed the forecast of $0.37. Despite this positive outcome, the company’s revenue fell short of expectations, coming in at $2.99 billion compared to the anticipated $3.02 billion. Analysts from Piper Sandler downgraded Expedia’s stock rating to Underweight, reducing the price target to $135, citing concerns about the company’s exposure to the U.S. market and the challenges in its business-to-consumer sector. Meanwhile, Citi analyst Jason Bazinet also adjusted the price target for Expedia, lowering it to $177 while maintaining a Neutral rating due to a slowdown in U.S. travel demand affecting room night growth and gross bookings.
The slowdown in U.S. travel demand was further emphasized by Expedia’s reported first-quarter room night growth of 6%, a decrease from the previous quarter’s 12% growth. This trend has been attributed to a 7% decline in inbound U.S. travel, including a significant 30% drop in visitors from Canada. Despite these challenges, Expedia’s business-to-business gross bookings increased by 14% year-over-year, and advertising revenue grew by 20%. The company has also implemented restructurings expected to result in $75 million in cost savings, contributing to future margin expansion.
Goldman Sachs analyst Eric Sheridan maintained a Neutral rating on Expedia stock, adjusting the 12-month price target to $5.00 from $6.00, reflecting updates to operating estimates following the earnings report. Sheridan noted the importance of the company’s strategic execution under its new management team, which investors will closely monitor. These recent developments underscore the mixed performance and strategic challenges Expedia faces in navigating the current economic landscape.
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