Expedia's Turning Point? BofA Sees Upside With VRBO Gains And Post-Election Boost
BofA Securities analyst Justin Post upgraded Expedia to Buy and raised the price target, citing potential improvements in 2025 due to better positioning at VRBO and Hotels.com. Despite challenges in B2C nights growth and revenues, early signs of improvement in U.S. bookings and consumer sentiment post-election could support 10% EBITDA growth. The analyst notes that a new management team may reignite investor interest. Expedia shares rose 2.73% recently, and investors can gain exposure through related ETFs.
BofA Securities analyst Justin Post upgraded Expedia Group, Inc. EXPE to Buy from Neutral and raised the price target to $221 from $187.
The analyst says that U.S. bookings, reported OTA nights, and RevPAR data had been trending at low single digits in 2024, but he is seeing early signs of modest improvement, which may indicate a normalization in domestic leisure travel spending into 2025.
While Expedia faced sentiment challenges due to soft B2C nights growth and revenues (-1% in the third-quarter of 2024) compared to peers, the analyst notes trends can improve in 2025 due to easier comps and better positioning at VRBO and Hotels.com.
Post says that he is more confident that Expedia can meet Street expectations for 10% EBITDA growth in 2025, supported by improving U.S. consumer sentiment post-election and a growing contribution from advertising, which rose 32% in the third-quarter 2024 and could account for 3 points of EBITDA growth next year.
Lastly, long-only sentiment remains cautious on Expedia, but a new management team with stronger execution could reignite investor interest and support multiple expansion, adds the analyst.
Investors can gain exposure to the stock via Invesco Leisure and Entertainment ETF PEJ and Amplify ETF Trust Amplify Travel Tech ETF AWAY.
Price Action: EXPE shares are up 2.73% at $185.58 at the last check Wednesday.
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