Orbitz Up as Lehman Upgrades

Orbitz (OWW) shares are higher Monday after Lehman’s Douglas Anmuth upgraded the stock to Overweight from Equal Weight. Anmuth wrote in a research note this morning that he is “incrementally positive” on the stock, asserting that it is unlikely that the company and other online travel agents will follow Priceline’s (PCLN) recent move and broadly reduce or eliminate airline booking fees.

He also says the company can reach international profitability in 2008. And he contends that near-term share buybacks are likely and would “send a strong signal to the market” about the company’s valuation in the wake of recent weakness in the stock.

Anmuth cut his price target on the stock to $13 from $16. Nonetheless, he says valuation is compelling at 6.6x 2008 estimated EBITDA, and a free cash flow yield of nearly 15%. He foresees 2007-2010 compounded annual growth of 10% for revenue and 18% for EBITDA.

Orbitz Monday is up 98 cents, or 11.5%, to $9.54.