Shares in TripAdvisor (TRIP) jumped over 4% early Friday after Bank of America (BofA) (BAC) turned bullish on the global travel company. The investment bank said it now sees “a clearer catalyst path for value realization” following the Boston-based company’s cooperation agreement with activist investor Starboard Value.
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Can Viator and TheFork Double TripAdvisor’s Value?
BofA analyst Nafeesa Gupta upgraded TRIP stock from Hold to Buy and lifted his price target from $14 to $15, predicting a 51% upside. Gupta contended that his team’s analysis indicated that TripAdvisor’s Viator online tourism marketplace and TheFork online reservation platform could become worth a combined $2.5 billion-plus, around double TripAdvisor’s current enterprise value of about $1.3 billion.
The analyst’s rating comes about a week after TripAdvisor agreed to Starboard’s push for four new directors on its board, with two appointed immediately. The two appointed are Dhiren Fonseca and Andrew Cates.
Fonseca is a former C-suite executive at rival travel company Expedia (EXPE) and the current chair of designer clothing rental platform Rent the Runway (RENT), while Cates is the founder of RVC Outdoor Destinations, an upscale outdoor vacation resorts operator.
Starboard Brings TripAdvisor Under Radar
Starboard has been pushing to reduce the travel company’s headcount costs while monetizing traffic pushed to the company’s platforms by AI. The activist investor’s push comes as TripAdvisor continues to face profit margin pressure despite growing its sales.
TripAdvisor’s legacy Hotels & Other segment, which includes its traditional metasearch, display ads, and related legacy travel products, continues to face long-term, structural headwinds.
Analysts have argued that while TripAdvisor’s Experiences segment, the grouping for its tours, activities, and attractions marketplace businesses, recently reported a double-digit growth in gross booking value, its performance still falls behind private rival GetYourGuide.
Is TripAdvisor a Good Stock to Buy?
Across Wall Street, analysts still consider TripAdvisor’s shares a Hold based on their consensus rating. This breaks down to four Buys, six Holds, and three Sells issued over the past three months.
However, the average TRIP price target of $14.75 implies about 48% upside.
