Jefferies Upgrades Expedia (EXPE) to Buy

Jefferies analyst John Colantuoni upgraded Expedia (NASDAQ: EXPE) from Hold to Buy with a price target of $300.00 (from $240.00).

The analyst comments: "Our analysis supports EXPE’s continued delivery of HSD%+ Lodging Bookings growth and 100+ bps of annual EBITDA margin expansion, which is furthered by robust share repurchases for a 3+ yr runway of 20%+ EPS growth. Our constructive outlook is also supported by a recent acceleration in B2C lodging, elevated traffic growth, and positive demand signals across US travel. We model modest Bookings/EBITDA upside but see potential for meaningful margin upside, supported by incremental cost savings and a history of upside to initial FY guidance. However, despite EXPE’s attractive EPS algo and upside potential, forward GAAP P/E resides ~40% below Internet and at a depressed level vs the broader market. We upgrade to Buy based on our view that EXPE is poised to benefit from a 3+ yr runway of 20%+ EPS growth and potential multiple appreciation. Our $300 PT (prior $240) implies ~14x '27 GAAP P/E, which is 25% below Internet despite EXPE's faster EPS growth (26% 3-yr CAGR vs. 17% avg) to account for ongoing headline risk created by the ME conflict."

For an analyst ratings summary and ratings history on Expedia click here. For more ratings news on Expedia click here.

Shares of Expedia closed at $225.81 yesterday.

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