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Investors Digesting Analysts’ Optimism over Expedia

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Analyst views

It is important to be aware of analyst recommendations or changes to recommendations, as they can significantly affect the company’s stock price. Changes in a popular analyst’s view can cause a significant short-term movement in the stock price.

Out of the 28 analysts surveyed by Bloomberg who track Expedia (EXPE), 67.9% (19 analysts) have a “buy” recommendation on the stock, 28.6% (eight analysts) have a “hold” rating, and 3.6% (one analyst) have a “sell” rating.

All analysts have maintained their ratings on Expedia. However, some analysts have lowered their price targets for Expedia since its 1Q16 results were released.

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Target price

Expedia’s (EXPE) consensus 12-month target price is $135.24, lower than the previous consensus of $142.39. The current target price indicated a 16% return potential on the July 22 closing price of $116.58.

Naved Khan from Cantor Fitzgerald has maintained his “buy” rating with the highest price target of $180. RBC Capital Markets’s Mark S. Mahaney has reduced the target price from $180 to $165, but the firm has maintained the “outperform” rating.

Scott Devitt from Stifel and Heath P. Terry from Goldman Sachs have the lowest target prices of $99 each. Goldman Sachs has a “neutral” rating on the stock, while Stifel has a “sell” rating.

Analyst estimates

For 2016, analysts estimate Expedia’s sales to grow by 33% to ~$8.9 billion, compared with 2015’s 16% growth. The company’s 2016 EBITDA[1. earnings before interest, tax, depreciation, and amortization] is expected to grow by 49% to ~$1.6 billion as compared to ~$1.1 billion in 2015, with 7.6% growth.

In the next few articles, we will discuss what led to these estimates, helping investors judge whether analysts are being optimistic or conservative on the stock. We will also help you understand what may be priced into the stock.

We will also cover pre-earnings expectation for EXPE’s competitors Priceline (PCLN), TripAdvisor (TRIP), and Ctrip (CTRP). You can keep track of these series on the Market Realist Online Travel page.

The First Trust Dow Jones Internet Index ETF (FDN) holds ~2.9% in Expedia.

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