After Q3 Beat and M&As Ctrip.Com (CTRP) is Expected to Retain Its Bullish OutlookBy Carrie Williams
The Chinese travel service provider, Ctrip.Com International (NASDAQ: CTRP) has reported its Q3 numbers on Wednesday, November 23, beating street estimates in both earnings ($0.01 vs estimated -$0.08) as well as revenue ($836 million vs estimated $810.87 million). The company also announced the acquisition of travel website Skyscanner and a Q4 guidance that was above the consensus estimates.
Following the spree of positive news, the share prices of CTRP surged by nearly 9.8% to close at $45.01 this Friday, inching ahead of its 50-day SMA of $44.91. In a report released on November 25, Oppenheimer analyst Jed Kelly reiterated his Buy rating and $55 price target on the stock, which is an upside of 22.19% from the current levels. According to TipRanks.com, Jed Kelly’s past rating performance has gained him a five-star ranking with an average return of +27.2% and a 72% success rate.
Along with better-than-anticipated quarterly results, Shanghai-based Ctrip had announced the agreement for acquiring Scotland-based travel search site Skyscanner in a deal that values Skyscanner at 1.4 billion pounds (Nearly $1.74 billion). This acquisition is expected to close by end of this year.
Kelly believes that due to this acquisition, CTRP will be able to leverage Skyscanner’s strong European brand platform for expanding China outbound opportunities, as well as see efficiencies through technology sharing around air-ticketing and cross-selling packages. The online demand competencies in search marketing are also anticipated to improve with this M&A.
CTRP’s recent string of acquisitions includes 25% stake in Indian travel site MakeMyTrip and share of state-run China Eastern Airlines, which claims 94 million passengers. The company had also agreed to a share swap with its arch rival Qunar and together, they currently possess more than 70% market share of the under-penetrated online travel market of China. Thanks to reduced completion as well as secular drivers like mobile penetration, open platform, and outbound travel and yield management, Ctrip is aggressively gaining further market shares.
With the purchase of Skyscanner, Ctrip now has the opportunity to offer its services to 60 million active users spanned across 30 languages, further expanding its global footprints. This is expected to bring up the shares of CTRP from the recent slump and drive its share prices higher in near future. At any rate, the stock is currently crowded with buyers, as well as receiving positive ratings from analysts.
CTRP has an overall rating consensus of Strong Buy and $54.71 price target, according to TipRanks. The price target is an upside of 21.55% from the current levels.