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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Expedia Group Inc    EXPE

EXPEDIA GROUP INC (EXPE)
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Expedia shares sink after disappointing 2018 forecast

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02/09/2018 | 03:30pm CEST
The logo of global online travel brand Expedia is pictured at the International Tourism Trade Fair in Berlin

(Reuters) - Shares of U.S. online travel services company Expedia (>> Expedia Inc) fell 16 percent in premarket trading on Friday, after forecasting 2018 selling and marketing costs would outpace revenue growth as it battles rivals for market share.

(Reuters) - Shares of U.S. online travel services company Expedia (>> Expedia Inc) fell 16 percent in premarket trading on Friday, after forecasting 2018 selling and marketing costs would outpace revenue growth as it battles rivals for market share.

The company, which owns Expedia.com and Hotels.com, reported equally disappointing previous quarter results partly due to underperformance at its Trivago (>> Trivago NV - ADR) hotel-search website.

The latest quarter was the first full quarter under Expedia's new Chief Executive Officer Mark Okerstrom, who succeeded Dara Khosrowshahi after he left to take the top job at car-ride provider Uber Technologies Inc.

"Under the new management, Expedia is more aggressively investing in tech and marketing to scale its global footprint and catch up to industry leader Priceline Group Inc (>> Priceline.com), which currently has approximately 2x the inventory and room nights sold as Expedia," RBC Capital Markets analyst Mark Mahaney said.

Mahaney lowered his price target to $141 from $155, while maintaining an "outperform" rating.

Concerns that the apparent inventory war brewing between Priceline and Expedia after the management transition could weigh on the sector in a similar manner to what happened in China with online travel company Qunar, said Benchmark Co analyst Daniel Kurnos.

Profitability at Qunar and rival Ctrip (>> Ctrip.com International) were hurt a few years ago after a costly price war involving discount coupons to gain a bigger pie of the booming Chinese online travel sector.

"We don't envision a pleasant end to the apparent pricing war any time soon, noting that the Qunar situation took nearly 18 months to fully resolve itself," Kurnos said, downgrading the stock to "hold" from "buy" and suspending a price target for the stock.

Bellevue, Washington-based Expedia said on Thursday that investments in its core business and in vacation rental site HomeAway, which competes with Airbnb, as well as higher cloud spending will hurt the first quarter of 2018.

Yet some analysts were optimistic about the long term prospects of Expedia as investments including increased hiring at its lodging business would drive faster earnings before interest, taxes, depreciation and amortization and free cash flow growth in 2019.

"We acknowledge Expedia is now likely to be a show-me story until the second and the third quarter... but we remain "over weight" and are buyers of (the stock)," Morgan Stanley analyst Brian Nowak said, lowering his price target to $150 from $160.

Up to Thursday's close of $123.03, Expedia's shares had risen about 0.2 percent in the past 12 months, underperforming a 13.6 percent increase in the Dow Jones U.S. Travel and Leisure index <.DJUSCG>.

(Reporting by Ankit Ajmera and Sanjana Shivdas in Bengaluru; Editing by Bernard Orr)

By Ankit Ajmera and Sanjana Shivdas

Stocks mentioned in the article
ChangeLast1st jan.
CTRIP.COM INTERNATIONAL -0.18% 39.61 Delayed Quote.-10.18%
EXPEDIA GROUP INC 1.52% 133.49 Delayed Quote.11.46%
TRIVAGO NV - ADR -1.39% 4.25 Delayed Quote.-37.87%
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Financials ($)
Sales 2018 11 280 M
EBIT 2018 1 235 M
Net income 2018 371 M
Debt 2018 1 068 M
Yield 2018 0,91%
P/E ratio 2018 55,37
P/E ratio 2019 31,83
EV / Sales 2018 1,84x
EV / Sales 2019 1,49x
Capitalization 19 651 M
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Technical analysis trends EXPEDIA GROUP INC
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 33
Average target price 151 $
Spread / Average Target 13%
EPS Revisions
Managers
NameTitle
Mark D. Okerstrom President, Chief Executive Officer & Director
Barry Charles Diller Chairman
Alan Pickerill Chief Financial Officer, Treasurer & Executive VP
Dara Khosrowshahi Director
Victor A. Kaufman Vice Chairman
Sector and Competitors
1st jan.Capitalization (M$)
EXPEDIA GROUP INC11.46%19 651
BOOKING HOLDINGS INC5.51%89 329
CTRIP.COM INTERNATIONAL-10.18%21 573
CHINA INT'L TRAVEL SERVICE CORP45.49%18 128
TRIPADVISOR57.43%7 414
FLIGHT CENTRE TRAVEL GROUP LTD49.77%4 728