Expedia: metasearch will drive multiple expansion - FBR

|By:, SA News Editor

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.