Barrington analyst Patrick Sholl maintained a Buy rating on Travelzoo (TZOO – Research Report) today and set a price target of $17.00.
Patrick Sholl has given his Buy rating due to a combination of factors that highlight the potential for growth in Travelzoo’s business. The company’s revenue trends are showing signs of improvement, with Q1 revenues aligning with expectations and surpassing the previous year’s figures. This growth is primarily driven by an increase in subscriptions from legacy members, which is expected to continue into Q2 with anticipated double-digit growth. Despite the increased marketing expenses associated with subscriber acquisition, both the European and North American segments have reported revenue growth.
Travelzoo’s large member base of 30 million, though mostly non-paying, presents a significant opportunity for advertisers, as the company transitions legacy members to a free subscription tier. This strategy is part of a broader effort to enhance subscriber acquisition and engagement, which could mitigate potential disruptions in the advertising business. Additionally, while there are challenges such as geopolitical concerns and shifts in consumer behavior, Travelzoo is positioned to leverage unused capacity from travel operators to offer attractive deals. The company’s ongoing investment in sales and marketing, along with its active share repurchase program, underscores its commitment to reinvigorating its business model and achieving long-term growth.