Expedia (EXPE) could be an intriguing stock to watch, according to Wall Street analysts’ latest ratings. Analysts covering the stock are expecting a strong double-digit upside in its price. Of the 33 analysts covering EXPE, 22 have recommended “strong buys” or “buys,” and 11 have recommended “holds.”
Given Wall Street’s one-year forward price target of $148.07, EXPE has a potential upside of 32.7% from its current price of $111.62.
What’s driving this optimism?
The optimism surrounding Expedia stock can be attributed to its back-to-back quarters of strong bottom line results. The company’s EPS have topped Wall Street’s estimates in the last three quarters and have also marked significant YoY (year-over-year) improvement.
Expedia reported its third-quarter results on October 25. It reported adjusted EPS of $3.65, surpassing the estimate of $3.12 and marking a significant YoY rise of ~45%. Its revenue of $3.28 billion rose 10.5% but fell short of analysts’ forecast of $3.30 billion.
An improving US economy as reflected in the country’s growing GDP, healthy job market, and steady rise in wages is driving travel demand in the domestic market, which should support Expedia’s top and bottom line results. Moreover, the company’s sustained focus on marketing initiatives and the enhancement of its product portfolio, along with its mobile-centric product design, should further boost its user base.
With its enriched global footprint, Expedia is also well positioned to benefit from growing demand for online travel booking platforms. As per Technavio’s latest report, global online booking is expected to increase at a compound annual growth rate of 11% from 2018 to 2022.
Peers’ ratings and target prices
Analysts are bullish on Expedia’s peers Ctrip.com International (CTRP) and Booking Holdings (BKNG), which received “buy” ratings from the majority of analysts tracking their respective stocks. The one-year target prices for Ctrip.com and Booking Holdings signify potential upsides of 42.1% and 27.3%, respectively.
However, peer TripAdvisor (TRIP) has “hold” recommendations from the majority of analysts. It has a one-year target price of $58.08, suggesting a potential downside of 1.2% from its current price of $58.76.
Expedia makes up ~4.9% of the Invesco Dynamic Leisure and Entertainment ETF (PEJ).