On Monday, DA Davidson adjusted its stance on Expedia Group Inc (NASDAQ:EXPE), lowering the price target from the previous $152.00 to $135.00, while keeping a Neutral rating on the stock. The revision follows Expedia's first-quarter 2024 earnings report, which presented a combination of results and an unexpected reduction in the company's full-year guidance.
The lowered guidance is largely attributed to a slower-than-expected recovery in revenue at Vrbo, Expedia's vacation rental business, which has recently undergone a technology platform migration. Additionally, performance issues were noted at Hotels.com, which is reportedly underperforming for similar reasons.
DA Davidson's revised forecasts for Expedia include a 2% decrease in the 2024 revenue estimate and a 5% reduction in the 2024 EBITDA estimate, from $3,064 million to $2,911 million. The new price target of $135.00 is based on an implied 7x the firm's 2024 EV/EBITDA estimate.
The announcement comes at a time when the travel industry is navigating post-pandemic recovery, with various companies facing unique challenges. Expedia's recent technological changes appear to have temporarily hindered its revenue growth, prompting the firm to adjust its expectations for the year.
InvestingPro Insights
Expedia Group Inc's recent earnings report and guidance revision have caught the attention of investors, and with DA Davidson's adjusted price target, there's a clear interest in how the stock will perform moving forward. According to InvestingPro data, Expedia currently holds a market capitalization of $15.3 billion, with a Price to Earnings (P/E) ratio of 20.83. Notably, the P/E ratio adjusted for the last twelve months as of Q1 2024 is more attractive at 12.54, potentially signaling an undervaluation relative to near-term earnings growth.
InvestingPro Tips highlight that management's aggressive share buybacks and a high shareholder yield are positive indicators for investors. Additionally, Expedia's impressive gross profit margins, which stand at 88.39% for the last twelve months as of Q1 2024, suggest a strong ability to convert revenue into profit. Despite recent stock price volatility, with a 24.96% drop over the last three months, analysts remain optimistic about the company's profitability this year. For those looking to delve deeper into Expedia's financial health and future prospects, there are over 10 additional InvestingPro Tips available, offering a more comprehensive analysis.
InvestingPro also notes that the stock is currently trading at a high Price to Book multiple of 17.17. While the company does not pay a dividend, the potential for capital gains may still attract investors, especially those who are interested in the company's long-term growth trajectory. To explore these insights further and to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, readers can use the coupon code PRONEWS24.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.