Expedia (EXPE) Stock Pops on EPS Beat, Analyst Sees Company 'Well Positioned For The Inevitable Recovery'

Shares of Expedia (NASDAQ: EXPE) rose nearly 5% in premarket trading on Friday after the company reported better-than-expected adjusted Q4 2021 earnings.

The engineering company reported an adjusted EPS of $1.06, compared to the loss per share of $2.64, and topped the consensus estimates of 60 cents per share.

Revenue came in at $2.28 billion in the fourth quarter, up from $920 million in the year-ago quarter, but slightly missed the analyst consensus of $2.29 billion.

Adjusted EBITDA in the period stood at $479 million, compared to the loss of $160 million in Q4 2020 and consensus estimates of $390.2 million.

"While we experienced yet another significant travel disruption from Covid this quarter, we were pleased to see that the impact was less severe and of shorter duration than previous waves. Notably, the travel industry and traveling public prove more resilient with each passing wave, and we continue to expect a solid overall recovery in 2022, barring a change in the trajectory of the virus," said Peter Kern, Vice Chairman, and CEO of Expedia Group.

Stifel analyst Scott Devitt raised the price target to $215.00 per share from the prior $190.00. Devitt sees EXPE “well positioned for the inevitable recovery of travel demand as COVID concerns eventually wane and restrictions ease.”

“Travel trends improved early in the quarter, though weakened in December due to the Omicron variant. The company reported a third consecutive quarter of adj. EBITDA profitability, well ahead of our and consensus expectations, largely due to operating efficiencies achieved during the pandemic that will continue to provide meaningful margin upside. The company did not provide formal guidance but noted that weak demand persisted in January as COVID case numbers remained elevated, though trends have improved above 2019 levels in recent weeks,” the analyst said in a client note.

Mizuho analyst James Lee reiterated a Neutral rating and a $155.00 per share price target.

“We anticipate headcount and salary to increase in FY22, and performance marketing expenses to ramp up as demand returns. Due to a higher cost base, we lower our FY23 EBITDA by 5% to $2.9bn and introduce our FY24 EBITDA of $3.3bn. Maintain Neutral rating and our PT at $155, representing 10x of FY24 EBITDA. As travel returns to normal, we anticipate the mix shift to urban markets and international destinations to be less favorable to EXPE.”

By Senad Karaahmetovic | [email protected]

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