Analysts’ views on Expedia
It’s important to know about analysts’ recommendations or changes to recommendations since they can significantly affect a company’s stock price. Changes to a popular analyst’s view can cause a significant short-term movement in a stock.
According to a Bloomberg consensus, of the 29 analysts tracking Expedia (EXPE), 69.0% (19 analysts) have a “buy” recommendation on the stock. That’s higher than 67.9% of analysts who recommended a “buy” in 2Q16. About 27.6% (eight analysts) have a “hold” rating, and 3.4% (one analyst) gave it a “sell” rating.
Pacific Crest Securities has upgraded Expedia’s rating, and Morningstar has downgraded it to a “hold.” Some analysts have increased their price targets since the second-quarter results.
Expedia’s consensus 12-month target price is $136.08, which is higher than the previous consensus of $135.24. The current target price indicates a 9.2% return potential from the closing price of $127.58 on October 24, 2016.
Naved Khan of Cantor Fitzgerald has maintained his “buy” rating with the highest price target of $175, but that’s lower than his target of $180 after 2Q16. Mark Mahaney of RBC Capital Markets, who reduced the target price from $180 to $165 in 2Q16, has maintained the same target price with an “outperform” rating. Scott Devitt from Stifel and Heath P. Terry from Goldman Sachs have the lowest target prices of $99 and $98, respectively. Goldman Sachs has a “neutral” rating on the stock, while Stifel has a “sell” rating.
For 2016, analysts estimate Expedia sales to rise 31.0% to $8.7 billion compared to a 16.0% rise in 2015. EBITDA (earnings before interest, tax, depreciation, and amortization) for 2016 is expected to rise 47.0% to $1.6 billion compared to $1.1 billion, or a 7.6% rise, in 2015.
In the next few parts of this series, we’ll see what led to these estimates, which could help you judge if analysts are being optimistic or conservative on the stock. We’ll also give you some ways to determine what may be priced into the stock.
Finally, we’ll take a look at pre-earnings expectations for Expedia’s competitors, including Priceline Group (PCLN), TripAdvisor (TRIP), and Ctrip.com International (CTRP). You can also keep track of these companies at the Market Realist Online Travel Agency page. EXPE forms ~1.4% of the holdings of the Guggenheim S&P 500 Pure Growth ETF (RPG).