Expedia Downgraded to Underweight Amid Weak Growth and Market Challenges

Piper Sandler analyst Thomas Champion downgraded the rating on Expedia (EXPE – Research Report) to a Sell yesterday, setting a price target of $135.00.

Thomas Champion has given his Sell rating due to a combination of factors affecting Expedia’s performance. The company’s first-quarter results showed mixed outcomes, with bookings and revenues falling short of expectations by 1%, despite a better-than-expected EBITDA. The consumer segment, particularly the B2C business, exhibited weak growth, which was a significant contributor to the underperformance. Additionally, the decline in US inbound travel and reduced travel from Canada further exacerbated the situation.
Champion’s concerns are compounded by the company’s guidance for future quarters, which indicates modest growth in bookings and revenue, lower than previously anticipated. The heavy concentration of Expedia’s business in the US market makes it susceptible to further declines in travel demand. Consequently, the discounted cash flow analysis now suggests a lower share value, prompting the downgrade to an Underweight rating. The risks of competition, inflation, and consumer strength also play a role in this cautious outlook.

Based on the recent corporate insider activity of 59 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of EXPE in relation to earlier this year.