Tuesday, B.Riley sustained its Buy rating and $186.00 stock price target for Expedia (NASDAQ:EXPE) Group, Inc. (NASDAQ:EXPE), expressing increased confidence in the company's business-to-business (B2B) offerings. The firm highlighted Expedia's B2B segment as a differentiated, end-to-end travel solution that serves a broad and diverse customer base, and operates with significant scale.
The firm anticipates that Expedia's B2B services will effectively capture travel spending through partner channels. Expectations are set for the segment to experience robust growth and profitability in the short to medium term. This optimism is fueled by anticipated increases in partner spend, new customer acquisitions, and improved margins due to scaling operations.
Moreover, B.Riley noted the potential benefits to Expedia's business-to-consumer (B2C) operations. The expected positive impacts include re-platforming efforts, the introduction of loyalty programs, and continued cost management. These factors contribute to the firm's positive outlook on Expedia's overall business prospects.
The investment firm also pointed to Expedia's significant share buyback program, with approximately $3.5 billion remaining, as a sign of the company's financial health and commitment to shareholder value. With the stock trading at 8.6 times its projected calendar year 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA), B.Riley views the risk/reward balance for investing in Expedia as attractive.
In other recent news, Expedia Group's B2B segment has shown significant growth, marking $25 billion in bookings and over $100 million in room nights in 2023. The segment's growth, distinct from the consumer business, has been propelled by loyalty use cases, international markets, and corporate travel.
CEO Ariane Gorin emphasized the B2B growth strategy during a recent earnings call, revealing the company's ambition to capture a larger share of the $1.2 trillion addressable market through its robust hotel supply, distribution products, and technology.
While the B2C segment has experienced fluctuations, it shows strong growth in Brand Expedia and is leveraging innovations to grow Vrbo. The company's One Key loyalty program, which aims to tie together Expedia, Hotels.com, and Vrbo in the US, has been paused internationally for reevaluation.
In terms of future expectations, Expedia Group is committed to growing both its B2B and B2C segments, with each having its own growth strategies. The company plans to continue investing in supply, technology, and its team to maintain a competitive edge, despite a slowdown in the travel industry noted in July. These are among the recent developments at Expedia Group.
InvestingPro Insights
In line with B.Riley's positive stance on Expedia Group, Inc. (NASDAQ:EXPE), InvestingPro data supports the notion of a company with resilient financial metrics. With a market capitalization of $18.11 billion and a P/E ratio standing at 23.58, Expedia shows a significant presence in the market. Impressively, the company's gross profit margins have been robust, recorded at 88.9% over the last twelve months as of Q2 2024, indicating efficient cost management and a strong ability to generate revenue over costs.
InvestingPro Tips highlight that Expedia's management has been focused on shareholder returns, as evidenced by aggressive share buybacks and a high shareholder yield. Moreover, Expedia's stock has demonstrated solid performance with a strong return over the last three months, signaling investor confidence. It is worth noting that, for those interested in deeper analysis, InvestingPro offers an additional 13 tips on Expedia, providing a broader perspective on the company's financial health and market position.
These metrics and insights from InvestingPro align with B.Riley's outlook, reinforcing Expedia's potential for growth and profitability, particularly within its B2B segment. With the company trading close to InvestingPro's fair value estimate of $176.78, investors may find the current price level an attractive entry point, considering the long-term prospects of the company.
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