Expedia's New Prospects: BofA Upgrades Stock with Promising Gains
Expedia Group, Inc. Gains a New Perspective
BofA Securities analyst Justin Post has recently upgraded Expedia Group, Inc. (NASDAQ: EXPE) from Neutral to Buy, raising the price target significantly from $187 to $221. This exciting development indicates a shift in sentiment regarding the company's future performance.
Insights from the Analyst
According to Post, recent data shows U.S. bookings, reported OTA nights, and RevPAR has been trending in low single digits for 2024. However, he has identified early signs of a potential rebound, suggesting a normalization in the domestic leisure travel market may be on the horizon looking towards 2025.
Challenges and Opportunities Ahead
Despite facing some sentiment challenges with soft B2C nights growth—having experienced a slight revenue decline of 1% in the third quarter of 2024—Post believes that there’s an opportunity for improvement in 2025. Factors such as easier comparisons and enhanced positioning of services like VRBO and Hotels.com could play a pivotal role.
Projected Growth in 2025
The BofA analyst expresses increased confidence that Expedia can achieve street expectations of 10% EBITDA growth by 2025. A key contributor to this positive outlook is the anticipated rise in U.S. consumer sentiment following the elections, coupled with a robust contribution from advertising revenue. In the third quarter of 2024, advertising revenue surged by 32%, which could bolster EBITDA growth by an additional 3 points next year.
Investor Sentiment
While investor sentiment towards Expedia remains cautious, the introduction of a new management team is expected to enhance operational execution. This boost could reignite interest among investors and potentially support stock valuation expansion.
Getting Exposure to Expedia
Investors looking to gain a strategic foothold in the sector can consider associated stocks such as the Invesco Leisure and Entertainment ETF (NYSE: PEJ) and Amplify ETF Trust Amplify Travel Tech ETF (NYSE: AWAY), which also encompass holdings in Expedia Group.
Current Stock Performance of EXPE
As of the last check, EXPE shares have risen by 2.73%, now valued at $185.58, showcasing a positive trend amid the recent analyst upgrades.
Frequently Asked Questions
What led to the upgrade of Expedia Group by BofA?
The upgrade was driven by signs of improvement in U.S. booking trends and confidence in achieving future EBITDA growth.
What is the new price target for EXPE shares?
BofA has raised the price target for EXPE shares from $187 to $221.
Which factors could boost Expedia’s performance in 2025?
Rising consumer sentiment post-election and improved positioning of VRBO and Hotels.com are expected to contribute positively.
How has the advertising revenue impacted Expedia?
Advertising revenue for Expedia grew by 32% in the last quarter, significantly supporting expected EBITDA growth.
Which ETFs offer exposure to Expedia?
Investors can gain exposure through the Invesco Leisure and Entertainment ETF (PEJ) and the Amplify ETF Trust Amplify Travel Tech ETF (AWAY).
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