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On Friday, Piper Sandler adjusted its stance on Expedia Group Inc. (NASDAQ:EXPE), shifting the company’s stock rating from Neutral to Underweight and reducing the price target to $135 from the previous $174. Piper Sandler’s decision came after Expedia reported first-quarter results that showed mixed performance, with bookings and revenues slightly missing the mark by 1%, although this was somewhat balanced by better-than-expected EBITDA performance. According to InvestingPro data, Expedia maintains impressive gross profit margins of 89.5% on revenues of $13.79 billion, while currently showing a GREAT overall financial health score.
The firm expressed concern over the future, highlighting negative aspects of Expedia’s business. The commentary from Expedia regarding U.S. inbound travel and the business-to-consumer (B2C) sector was particularly disheartening, indicating a challenging path ahead. This sentiment aligns with InvestingPro data showing 10 analysts recently revising their earnings expectations downward. Piper Sandler suggested that the situation for Expedia could deteriorate further, prompting a reassessment of the company’s financial projections for 2025 and beyond.
Expedia’s substantial focus on the U.S. market is seen as a vulnerability, especially if travel demand continues to weaken. This perspective is supported by the firm’s discounted cash flow (DCF) analysis, which now values Expedia’s shares at $135, a decrease from the earlier estimate of $174. This new valuation is also below the trading price of Expedia’s shares following the market’s close.
The downgrade to Underweight reflects a more cautious outlook on Expedia’s stock, as the travel company faces potential headwinds. Piper Sandler’s revised price target of $135 takes into account these concerns and the anticipated impact on Expedia’s financial health and stock performance.
In other recent news, Expedia Group reported its first-quarter 2025 earnings, showcasing an earnings per share (EPS) of $0.40, which surpassed analyst expectations of $0.37. However, the company’s revenue of $2.99 billion did not meet the anticipated $3.02 billion, reflecting a slight shortfall that may have dampened investor enthusiasm. Despite the revenue miss, Expedia saw a 4% increase in gross bookings, totaling $31.5 billion, with a 6% rise in booked room nights. The company also experienced strong growth in its B2B bookings and advertising revenue, although B2C bookings remained weak.
Expedia introduced several AI-powered features to enhance user experience and is focusing on cost management and operational efficiency. The company’s adjusted EBITDA margin expanded by over one percentage point, reaching 9.9%. Looking ahead, Expedia projects Q2 2025 gross bookings growth between 2% and 4%, with revenue growth expected to be in the range of 3% to 5%. The company aims to expand its full-year EBITDA margin by 75 to 100 basis points, despite ongoing macroeconomic uncertainties.
In terms of analyst actions, there were no specific upgrades or downgrades mentioned. However, the company continues to emphasize the transformative potential of AI across its operations. Expedia’s CEO, Ariane Goran, highlighted the company’s focus on delivering long-term profitable growth while maintaining disciplined capital allocation.
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