On Friday, Expedia Group Inc. (NASDAQ:EXPE) experienced a shift in stock rating as Piper Sandler moved the travel platform's status from Overweight to Neutral. The firm also adjusted Expedia's price target, bringing it down to $145 from the previous $175.
The change in rating comes during a transitional phase for Expedia, as the company witnesses a change in leadership with the departure of CEO Kern. He is handing over the reins to the new CEO, Ariane Gorin. Alongside the executive switch, Expedia's management has also revised its yearly guidance downwards, indicating a less optimistic outlook for the company's performance.
The analyst from Piper Sandler highlighted concerns over the slowing growth in bookings, a vital indicator of the company's health in the competitive travel industry. This deceleration appears to have been anticipated by the market, as reflected in the stock's performance prior to the rating change.
Furthermore, the anticipated benefits from technological enhancements and a recent reduction in force (RIF), which were expected to improve margins, have not materialized as projected. This has contributed to the decision to downgrade the stock rating, as the firm takes a step back to reassess the situation.
InvestingPro Insights
In the wake of Expedia Group Inc.'s (NASDAQ:EXPE) stock rating downgrade by Piper Sandler, it's worthwhile to consider some additional metrics and insights that could help investors form a more comprehensive view of the company's position. According to real-time data from InvestingPro, Expedia's market capitalization stands at $18.03 billion, with a forward-looking P/E ratio of 15.96, indicating a potential undervaluation relative to near-term earnings growth. The company's gross profit margin impressively sits at 87.75% for the last twelve months as of Q1 2023, showcasing its ability to maintain profitability despite broader market challenges.
InvestingPro Tips also highlight that Expedia's management has been actively engaged in share buybacks, reflecting confidence in the company's value. Furthermore, the platform's short-term obligations exceeding its liquid assets is a point of consideration for investors looking at the company's financial health. For those interested in further analysis, there are additional InvestingPro Tips available, which can be explored at: https://www.investing.com/pro/EXPE. Investors can also benefit from an additional 10% off a yearly or biyearly Pro and Pro+ subscription by using the coupon code PRONEWS24.
It's also notable that analysts predict Expedia will be profitable this year, and the company has already been profitable over the last twelve months. With the next earnings date slated for May 2, 2024, stakeholders will be watching closely to see if the new leadership can capitalize on the company's strong gross profit margins and reverse the current downtrend in stock price, which is currently trading at 85.03% of its 52-week high.
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