Expedia Group Inc. Price Target Boost Hints at Bright Future
BTIG Raises Expedia's Price Target Amid Positive Growth
Recently, BTIG, a prominent financial services firm, adjusted its price target for Expedia Group Inc. (NASDAQ: EXPE) from $150 to $175 per share while maintaining a Buy rating, signaling confidence in the company's impressive growth trajectory. This revision is attributed to Expedia's stellar performance and optimistic future outlook.
Since early August, Expedia's stock has rallied significantly, prompting the BTIG analyst to reassess the previous price target. Although the stock has surged, it still trades under its pre-pandemic valuation, currently at 7 times EBITDA, a notable difference from the 10 times it commanded prior to the COVID-19 pandemic. The analyst emphasized that Expedia is now a more resilient entity with comparable growth rates and improved profit margins than before the pandemic.
Travel Sector Stability Supports Expedia's Performance
In the wake of uncertainty within the travel industry, especially following guidance cuts during a recent earnings season, there have been growing concerns about travel demand's sustainability. However, subsequent market checks indicate a steadiness or even improvement in travel trends from July onwards, suggesting that Expedia's performance in the upcoming quarter may bolster expectations.
Expedia's Long-Term Growth Projections
From a broader perspective, BTIG perceives Expedia as a significantly underrated earnings generator. They forecast a compound annual growth rate (CAGR) exceeding 20% for the company's earnings per share (EPS) from 2024 to 2026. This optimistic projection is reinforced by Expedia's robust free cash flow and its commitment to shareholder returns via share buybacks.
Alongside this positive news, a recent shift in stock ratings for Expedia Group Inc. came from TD Cowen, which changed its recommendation from "Buy" to "Hold" due to concerns regarding performance in the business-to-consumer (B2C) sector. Conversely, Expedia's business-to-business (B2B) segment has thrived, achieving $25 billion in bookings and exceeding 100 million room nights in 2023.
Leadership Changes and Market Responses
In addition to these developments, Expedia's Vice Chairman, Peter Kern, has resigned from his role and the Board of Directors, although details about his successor remain undisclosed. Analysts from Truist Securities and Cantor Fitzgerald have initiated coverage on Expedia, assigning "Hold" and "Neutral" ratings, respectively. Meanwhile, B. Riley has maintained a "Buy" rating, expressing confidence in the company's B2B initiatives.
Expedia's One Key loyalty program, which connects Expedia, Hotels.com, and Vrbo in the U.S., has been paused internationally for evaluation. This reevaluation reflects the company's strategy to optimize its offerings in the changing market landscape.
InvestingPro Insights on Expedia's Financial Health
Building upon BTIG's positive outlook, InvestingPro data further highlights Expedia Group Inc.'s financial strength and market position. The company boasts a solid market capitalization of approximately $19.33 billion and has achieved impressive gross profit margins, noted at 88.9% in the last twelve months as of Q2 2024. This aligns with BTIG's perspective on Expedia’s enhanced profitability in the aftermath of the pandemic.
Additionally, Expedia has shown remarkable returns over the past three months, with a total price return of 19.11%, appealing to investors interested in potential short-term gains. Currently, the stock trades at a high P/E ratio of 25.03, yet its adjusted P/E ratio for the last twelve months as of Q2 2024 is more favorable at 15.33, suggesting a possibility of valuation normalization. InvestingPro Tips indicate that management has been actively buying back shares, reflecting confidence in the company's future and possibly serving as a catalyst for stock appreciation.
For those looking for more detailed insights, InvestingPro provides over 11 additional tips related to Expedia, helping investors understand the intricacies of the company's financial dynamics and market behavior. Staying updated with comprehensive data and expert analysis is crucial for making informed investment decisions.
Frequently Asked Questions
What was the new price target for Expedia set by BTIG?
BTIG has raised the price target for Expedia Group Inc. from $150 to $175 while maintaining a Buy rating.
Why did BTIG change the price target for Expedia?
BTIG adjusted the price target due to Expedia's strong performance and positive outlook, particularly in comparison to pre-pandemic valuations.
What is the current state of the travel sector impacting Expedia?
Despite initial uncertainty in the travel sector, trends have shown stability and improvement since July, which is expected to positively influence Expedia's upcoming performance.
What is the expected earnings growth rate for Expedia?
BTIG anticipates a compound annual growth rate (CAGR) of over 20% in Expedia's earnings per share (EPS) from 2024 to 2026.
What recent leadership change occurred at Expedia?
Expedia's Vice Chairman, Peter Kern, has stepped down from his position on the Board of Directors, with details about his replacement yet to be announced.
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