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Investing.com - Mizuho initiated coverage on TripAdvisor (NASDAQ:TRIP) with an Underperform rating and a $14 price target, implying an 18% downside from current levels. According to InvestingPro data, the stock is currently trading at a P/E ratio of 37.3x, with a market cap of approximately $2 billion. The company maintains good financial health with a current ratio of 1.24.
The research firm cited "significant renewed pressure on organic search traffic" visible in Similar Web data, which it expects to be a persistent long-term challenge for the travel platform. This concern comes despite TripAdvisor’s revenue growth of 3% over the last twelve months and a gross profit margin of 62.3%.
Mizuho projects a 6% compound annual growth rate (CAGR) for TripAdvisor’s total revenue from 2024 to 2027, below the Street’s expectation of 7%, while forecasting the core Brand TripAdvisor revenue to decline at a 3% CAGR during the same period, worse than consensus estimates of a 1% decline.
The firm acknowledged positive aspects of TripAdvisor’s business, including its exposure to the Experiences segment and that growth areas now represent over 50% of revenue, but cautioned these segments aren’t immune to traffic headwinds given the importance of TripAdvisor.com as a point-of-sale.
While Mizuho noted that shares appear inexpensive on a sum-of-the-parts valuation, it does not anticipate a value unlock as likely, considering the company has already conducted a strategic review and segmentation.
In other recent news, TripAdvisor has been the focus of multiple analyst updates following its latest financial results. UBS raised its price target for TripAdvisor to $19 from $18, maintaining a Neutral rating. This adjustment came despite a slight revenue shortfall of approximately $2 million, attributed to weakness in the Brand segment, but was offset by a notable margin improvement in its Viator business, which positively impacted adjusted EBITDA. Bernstein SocGen Group reiterated its Outperform rating with a $20 price target, highlighting a 7% revenue growth, 10% EBITDA growth, and 17% EPS growth in the second quarter. CFRA also adjusted its price target, raising it to $13 from $12, while maintaining a Strong Sell rating, citing a revised earnings outlook with projected earnings per share of $1.22 for 2025 and $1.31 for 2026. BMO Capital reiterated its Market Perform rating with a $15 price target, noting TripAdvisor’s progress in accelerating growth rates through strategic portfolio shifts. These developments reflect a mixed outlook among analysts, with varying expectations for TripAdvisor’s future performance.
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