On Wednesday, BofA Securities adjusted its stance on Expedia Group Inc. (NASDAQ:EXPE), upgrading the online travel company's stock from Neutral to Buy. Accompanying this upgrade, the firm also increased its price target for Expedia's shares from $187.00 to $221.00.
The upgrade was influenced by several factors that BofA Securities believes could benefit Expedia. These include early signs of improvement in U.S. travel trends, as indicated by RevPAR (Revenue per Available Room) and aggregated credit and debit card data. Additionally, the analyst noted that Expedia is facing easy comparisons in 2025 and has Street estimates that suggest a 10% growth in EBITDA for the same year.
A change in leadership at Expedia with a new CEO at the helm is also seen as a potential positive. The analyst believes that better messaging and execution under the new leadership could attract long-term investors to reconsider the stock.
Another point highlighted by BofA Securities is the valuation gap between Expedia and its competitor, Booking Holdings Inc. (NASDAQ:BKNG). Expedia's growing EV/EBITDA discount to Booking, which stands at 8x versus 19x on 2025 estimates, is noted despite expectations that the growth gap between the two companies will narrow (10% expected EBITDA growth for Expedia versus 12% for Booking in 2025).
The price objective adjustment to $221 from $187 is based on a blend of 10x of the estimated 2026 EBITDA and 17x of the estimated 2026 EPS. The firm also pointed out Expedia's free cash flow yield, which is 10% on 2025 estimates, compared to eBay (NASDAQ:EBAY)'s 13x. BofA Securities has also modified its income rating for Expedia, moving it from 8 (same/lower) to 9 (pays no cash dividend).
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.