Expedia (EXPE) drops after missing estimates, analysts lower PT as July bookings slow amid Delta threat

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Shares of Expedia (NASDAQ: EXPE) are down more than 6% pre-opening on Friday after the company released weaker-than-expected second quarter results.

EXPE reported an adjusted loss of $ 169 million or $ 1.13 per share, which does not match analysts’ estimates of a loss of $ 0.65 per share. Revenue was $ 2.11 billion.

“The second quarter saw continued improvement in many global travel segments, with North America in particular showing strength. Expedia Group benefited from a strong vacation rental performance and an improvement in conventional accommodation, offset by continued weakness in international travel, business travel and relatively high consumer interest in smaller markets and low-end accommodation. While this strength continued into the third quarter, recent news about Covid variants around the world continues to create uncertainty in the travel industry, ”said Vice President and CEO Peter Kern.

Morgan Stanley analyst Brian Nowak lowered the price target to $ 190.00 per share, from $ 200.00 for the EW-rated share.

“We attribute the potential slowdown in the recovery of overnight stays to EXPE’s lower exposure to smaller US and European towns. Overall, EXPE remains a name that will be driven by sustainable incremental market share gains (relative to offline channels and online competitors) and ultimate potential bookings size and profit power of 22 / 23 of the company, ”Nowak wrote in a note to clients.

“We are lowering our EXPE ’21 / ’22 gross bookings estimate by 6% / 5% given the forward-looking commentary regarding the negative impact of the Delta variant on the July trends, with a decline in July from the peak of June, ”adds the analyst.

BofA analyst Justin Post noted a continuation of the recovery, but the July slowdown caused the company to miss consensus. It rose to $ 191.00 per share from $ 210.00 on the target price, but remains bullish and reiterated a “Buy” note.

“The Delta remains a risk and we are disappointed with the accommodation / air mix disclosure, but we believe Expedia’s 2nd Quarter overnight booking trends were likely in their mid teens and close to Booking. Overall, we are constructive on Expedia given: 1) the signs of strong travel demand when cases decline, 2) the potential for greater earnings growth than peers through lower costs when cases are down. travel is normalized; 3) Attractive core OTA implicit valuation (with potential VRBO growth faster than Airbnb in 2021); and 4) Potential multiple expansion as Street expects strong growth in 2022/2023, ”Post adds.


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