Cantor Fitzgerald Reiterates a Buy Rating on Expedia

By George MacDonald

According to The Fly, in a report released yesterday, Naved Khan from Cantor Fitzgerald reiterated a Buy rating on Expedia (NASDAQ: EXPE), with a price target of $180. The company’s shares closed yesterday at $110.20.

Khan observed, “Survey shows listings with Traveler Service Fee (TSF) getting prominent exposure. Our analysis of vacation rental listings across 10 metropolitan markets in the US found that online bookable listings with a traveler services fee (TSF) dominate the top search results. While the TSF has been rolled out to only a subset of HomeAway’s listings, the prominence of these listings in the sort order bodes well for growth in transaction-based revenues over time. We believe that Expedia will iteratively tweak the transaction-based offering over time. TSF ~6.6% on average; Unlikely to adversely impact consumer booking behavior. TSF averaged 6.6% on the listings we surveyed, towards the low end of the company’s 6-9% target range. Importantly, given that this fee is not very obvious during the booking process (unless travelers click on “view details”), we do not anticipate an adverse impact from consumers in the check-out funnel. We also note that even with the TSF, HomeAway’s fee is still the lowest among the major players, with both Airbnb and TripAdvisor charging a 12% service fee to travelers, while Priceline has a ~15% take rate on its comparable inventory. Increased paid click volume highlights growing focus on variable advertising and transactions. Our analysis of paid click data from comScore shows robust 65% Y/Y growth in paid clicks for HomeAway YTD (Jan-Apr) vs. 5% in 4Q:15.”

According to TipRanks.com, Khan is a top 100 analyst with an average return of 19.3% and a 76.1% success rate. Khan covers the Technology sector, focusing on stocks such as TripAdvisor Inc., Travelzoo Inc, and Facebook Inc.

Expedia has an analyst consensus of Moderate Buy, with a price target consensus of $144.56

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Based on Expedia`s latest earnings report from March 31, the company posted quarterly revenue of $1.9B and quarterly net profit of -$121.9M. In comparison, last year the company earned revenue of $1.37B and had a net profit of $44.14M.

Unlike Cantor Fitzgerald`s latest rating, based on the recent corporate insider activity of 21 insiders, corporate insider sentiment is negative on the stock. Last month, Dara Khosrowshahi, a the CEO of EXPE sold 32,500 shares for a total of $2,583,425.

Expedia, Inc. is an online travel company. The company provides travel products and services to leisure and corporate travelers, including travel agencies, tour operators, travel supplier direct websites and call centers, consolidators and wholesalers of travel products and services, large online portals and search websites, certain travel meta-search websites, mobile travel applications, social media websites, as well as traditional consumer eCommerce and group buying websites. It also offers travel and non-travel advertisers access to a potential source of incremental traffic and transactions through its various media and advertising offerings on its transaction-based websites. The company operates through two business segments: Leisure and Egencia. The Leisure segment provides a full range of travel and advertising services to worldwide customers through a variety of brands including: Expedia.com and Hotels.com in the United States and localized Expedia and Hotels.com websites. The Egencia segment provides managed travel services to corporate customers in North America, Europe, and the Asia Pacific region. Expedia was founded on August 9, 2005 and is headquartered in Bellevue, WA.