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Expedia: metasearch will drive multiple expansion - FBR

  • FBR bumps its price target on Outperform-rated Expedia (EXPE) to $70 from $65, reflecting an increase in the assumed value of Trivago given the rising value of metasearch.
  • Firm highlights: (1) TripAdvisor's (TRIP) forward revenue multiple has expanded to 11x following its transition to metasearch; (2) Qunar Cayman Islands Ltd. (QUNR) is a leading Chinese metasearch site that recently went public and trades at 16x revenue; and (3) Trivago is a leading European hotel search site, similar in scale to TripAdvisor in the 2007–2008 time frame, and this brings to mind how that all played out for Expedia.
  • "The increase in our price target is tied to a step-up in the assumed Trivago multiple from 2.4x revenue to 6x, which still appears conservative in our view."
  • EXPE closed at $62.33 yesterday, with a 52-week range of $45.69-68.09.
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