Expedia Has 100% Upside, The Bears Are Wrong
Fri, Jun. 24, 3:46 PM
- Priceline (PCLN -12%) has plunged to four-month lows, but Piper Jaffray's Michael Olson sees a buying opportunity in online travel stocks, believing Brexit should not have a significant impact on European travel trends because the move will not have a major impact on consumer confidence.
- Olson thinks the protracted nature of the EU withdrawal process will ease its impact on consumer sentiment in Europe, and the European Central Bank already has implemented stabilization measures that should mitigate Brexit's impact on European consumer confidence.
- The U.K. represents just under 7% of the continent's travel demand, while a large portion of European travel consists of consumers traveling within their own countries, Olson says, adding that about half of PCLN's bookings are made by Europeans.
- Olson keeps Overweight ratings for PCLN, Expedia (EXPE -7%) and TripAdvisor (TRIP -6.1%), with respective price targets of $1,500, $147 and $95.
Mon, Jun. 20, 11:35 AM
- Atlantic Equities has raised Expedia (EXPE +4.7%) to Overweight from Neutral, citing expectations of meaningful growth driven by the company's non-core OTA assets.
- Analyst James Cordwell also sees diversification helping the stock's multiple, anticipating total EBITDA to grow from $1.17B in 2015 to $2.45B in 2018, with $760M of the increase being contributed by HomeAway, Orbitz and trivago.
- The firm currently has a $130 price target on shares.
Wed, Jun. 15, 7:34 AM| Wed, Jun. 15, 7:34 AM | 2 Comments
Fri, Apr. 29, 5:30 PM
- Much as it did following its Q4 report, Expedia (EXPE +8.2%) flew higher today following an earnings reporting featuring solid bookings figures. The online travel giant beat Q1 estimates and reported a 13% Y/Y increase in gross bookings when excluding its divested eLong unit and its recently-acquired Orbitz and HomeAway units. Including Orbitz and HomeAway, bookings rose 32% to $18.9B.
- Top-line performance/metrics: Room nights rose 32% Y/Y excluding Orbitz and HomeAway, and 37% otherwise. With revenue/night declining 9%, hotel revenue grew 25%. Air ticket revenue (boosted by Orbitz) rose 54%, with ticket sales rising 52% and revenue/ticket 1%.
U.S. bookings (received a strong M&A lift) rose 38% to $12.3B. International bookings rose 22% to $6.6B. Properties within Expedia's global lodging portfolio rose 23% Y/Y to over 282K.
- Sales/marketing spend (much of it going to search ads) rose 36% Y/Y in Q1 to $1.04B, and $312M has been spent YTD to buy back 2.9M shares (boosted EPS). Free cash flow fell 2% to $931.7M.
- On the earnings call (transcript), Expedia reiterated guidance for adjusted EBITDA to grow 35%-45% in 2016, with Orbitz/HomeAway contributing $270M-$325M. The company still expects "the vast majority" of this year's adjusted EBITDA to be produced in 2H16.
- Expedia's Q1 results, earnings release
Fri, Apr. 29, 9:12 AM
- Gainers: PRGN +75%. GNW +16%. P +13%. AMZN +12%. SDRL +11%. EXPE +11%. MNST +11%. ROVI +10%. SNMX +9%. LNKD +7%. CRC +7%. DNR+7%. DRYS +7%. TIVO +6%. LGCY +6%. SHPG +5%. GPL +5%.
- Losers: BIOC -22%. GLNG -17%. EPAY -17%. MOH -15%. SRCL -15%. IMGN -14%. SYNA -11%. AKS -8%. HCLP -8%. ALR -6%. GILD -6%. RXDX -6%.
Thu, Apr. 28, 5:35 PM
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Tue, Apr. 12, 1:37 AM
- A Cowen survey of 1,400 U.S. travelers found 44% of those who were Airbnb (Private:AIRB) users were very likely to recommend the service, and that another 38% were likely to recommend it. Airbnb users were also “9X as likely to be more satisfied by their average Airbnb stay vs. their average hotel stay for leisure travel.”
- However, 99% of Airbnb users also used hotels in the prior year, and were “heavier users of hotels (at 10 leisure hotel nights per customer) than the average hotel customer in [Cowen’s] survey (at 7 leisure hotel nights per customer).” Altogether, hotels still accounted for 69% of Airbnb users' total paid travel nights.
- Moreover, online hotel bookings leaders Priceline (NASDAQ:PCLN) and Expedia (NASDAQ:EXPE) have been investing in their own home/apartment rental offerings. Vacation rentals now account for an estimated 46% of the listings on Priceline’s Booking.com - most of the listings are in Europe - and Expedia recently bought leading vacation rental marketplace HomeAway for $3.9B. Cowen estimates vacation rentals now account for 15% of Priceline’s room bookings.
- Now read Priceline And Expedia Face The Might Of Airbnb
Tue, Apr. 5, 10:28 AM
- First Data (NYSE:FDC): "Despite its favorable debt maturity schedule (nothing due until 2018) and modest interest rate sensitivity (only approximately 1/4 of debt is floating), FDC appears to have suffered collateral damage in the recent high-yield credit market carnage. Nonetheless, we remain encouraged by FDC's positioning within the payment-processing ecosystem and continue to believe the company is well positioned to benefit from the secular trend toward electronic payments."
- T-Mobile USA (NASDAQ:TMUS): "T-Mobile's improving cash generation coupled with ongoing subscriber momentum reinforces our outperform rating. The company appears on track for 20% EBITDA growth in 2016/17. We continue to believe TMUS's standalone story is attractive with M&A upside [long term]."
- HCA: "We are recommending shares of HCA given strong Q4 results, a robust outlook, improved Affordable Care Act enrollment trends, and an attractive valuation. HCA's Q4 beat and bullish FY2016 outlook, released on January 29, 2016, were far in excess of expectations. Nevertheless, the stock has re-traced only a portion of its post-Q3 losses. Besides the Q3 earnings challenges, the market remains concerned with the outlook for the ACA, balance sheet leverage and mixed competitor results, but those concerns appear overblown. The stock is now trading at just 7.1x '16E EBITDA, which is a discount to the company's/industry's historical averages of 7.6x/8.6x."
- Expedia (NASDAQ:EXPE): Expedia is "our top long-term idea. The company is well positioned to gain online-travel share from its leading travel brands, solid management execution, and strategic deployment of capital. We believe the HomeAway acquisition is highly accretive, based on leveraging HomeAway's unique inventory with Expedia's online optimization capabilities. As a result, we forecast superior earnings growth that should result in significant shareholder value, in our view."
- FedEx (NYSE:FDX): "FedEx is lauded for its speed and service in its core FedEx Express segment, where it possesses the leading market share in 'express' parcel delivery in the U.S., as well as a strong position in its emerging FedEx Ground segment, both of which (particularly Ground) are benefiting from an e-commerce tailwind, which we estimate is driving formidable revenue growth in business-to-consumer. Anticipating a gradual economic recovery in the US/globally, we expect margin expansion via improved efficiencies and capital utilization, coupled with a realignment plan likely to meet/exceed targeting improved annual profitability of $1.65 billion by FY16."
- CVS: "The company continues to do well in the PBM (pharmacy benefit management) segment, taking new market share ($12.7 billion net new business) while integrating the newly acquired Omnicare and Target pharmacies. We believe that CVS's focus around building solutions that span the continuum of care will resonate well with clients. Near term, the continued strength in new PBM business and acquisition synergies will likely drive the upside. CVS's focus on delivering shareholder returns in multiple avenues - earnings growth, share buybacks and dividends, makes it very attractive, especially in this turbulent market."
- Fidelity National Information Services (NYSE:FIS): "The SunGard integration appears ahead of plan; we would not preclude upside synergies (i.e., above $200 million FY17 exit rate). FIS currently trades at approximately 14x our FY17E EPS, which we believe remains attractive."
- Coach (NYSE:COH): "With Creative Designer Stuart Vevers' influence on full-price channel for five quarters and impact on outlet at approximately 90% this [past holiday season], we are starting to see signs of stabilization of Coach brand in North America. All in all, at 17% operating margins (31% just two years ago) and early signs of brand inflection, COH is playing better offense, despite moderation in growth of overall handbag category, and likely stands to benefit from biggest competitor KORS slowing."
- WESCO (NYSE:WCC): "We believe WCC's hires into key strategic leadership positions in recent years support improved guidance rigor and represent a long-term investment in deeper organizational productivity potential across sales & marketing, supply chain, and IT (new CIO most recently). WCC remains positioned to drive long-term market share gains in the fragmented U.S. electrical distribution market in our view, as nonresidential and industrial capex markets recover. We note meaningful leverage to a sustained and more broad-based recovery and attractive long-term investment characteristics."
- Anthem (NYSE:ANTM): "Overall, while the Exchanges continue to cause shorter-term pressure, we think improvements to this business, along with the potential accretion from Cigna remain attractive long-term catalysts for the company. As a result, we maintain our Outperform rating."
Tue, Mar. 22, 8:30 AM
- Travel-related stocks are down sharply following the terror attacks in Belgium at a metro station and the international airport.
- The latest report indicates 26 people were killed and 130 were injured from the explosions.
- Notable movers in premarket trading include Priceline (NASDAQ:PCLN) -2.26%, Expedia (NASDAQ:EXPE) -3.1%, Delta Air Lines (NYSE:DAL) -2.5%, Carnival (NYSE:CCL) -2.4%, United Continental (NYSE:UAL) -3.6%, Norwegian Cruise Line Holdings (NASDAQ:NCLH) -2.0%, Royal Caribbean (NYSE:RCL) -2.4%, Tripadvisor (NASDAQ:TRIP) -1.6%.
- Previously: Brussels Airport, metro stations rocked by explosions (March 22)
- Previously: Futures lower after terrorist attacks in Brussels (March 22)
Thu, Mar. 10, 7:08 AM
- Piper upgrades Expedia (NASDAQ:EXPE) to Overweight from Neutral.
- Boosts price-target to $140 from $130. Implied upside 32.4%.
- Sees 2016 EPS at $4.95 (prev. $4.86) and 2017 EPS at $7.12 (prev. $5.57).
- Upgrade based on two factors: i) "Expedia's acquisition of HomeAway, while not risk-less, should lead to Ebitda upside even after significant reinvestment of growth into OpEx.
- ii) "Core Expedia is performing well and should drive sustainable mid-teens organic EBITDA growth. We believe Expedia's guidance for $350M of EBITDA from HomeAway in '18 is overly conservative as it assumes that ~70%+ of new revenue growth will be continuously absorbed by increases in OpEx. While Expedia's philosophy around reinvesting EBITDA upside may cap HomeAway outperformance, we believe re-investments in marketing spend should yield, at worst, shareholder-neutral future FCF."
- March 9: Expedia unveils plans for creating a massive Seattle waterfront HQ (Mar. 09 2016)
- Feb. 22: Stifel Nicolaus downgrades EXPE and TRIP to Sell
- Feb. 17: Investors bet travel trends will hold up
- Source: StreetInsider
Wed, Mar. 9, 6:52 PM
- 11 months after stating it plans to move from its current Bellevue, WA HQ to one in Seattle in 2019, Expedia (NASDAQ:EXPE) has unveiled an initial design. "Phase I" of the effort (expected to start in late 2016) involves creating 1.2M sq. feet of office space by converting four laboratory buildings (previously owned by Amgen) and constructing a new 600K sq. foot office building.
- An optional Phase II and Phase III respectively involve creating an additional 415K and 315K sq. feet of space. If they were to occur, the additional phases would be launched within a 15-year timeframe expected to be granted by the city of Seattle.
- The HQ effort follows several years of rapid organic and M&A-fueled growth. Expedia is expected by the Street to post 2016 revenue of $8.9B, up sharply from 2011's $3.4B.
Mon, Feb. 22, 7:07 AM| Mon, Feb. 22, 7:07 AM
Wed, Feb. 17, 10:14 AM
- Expedia (EXPE +6.4%) and TripAdvisor (TRIP +4.1%) are seeing healthy gains as Priceline (PCLN +10.6%) surges after beating Q4 estimates and reporting bookings growth accelerated to 13% Y/Y from Q3's 7% (and beat guidance for 1%-8% growth). Last week, Priceline and TripAdvisor gained in response to Expedia's Q4 numbers.
- Guidance: Priceline's Q1 top-line guidance is healthy: Bookings are expected to rise 12%-19% Y/Y (18%-25% exc. forex), room nights by 20%-27%, and revenue by 9%-16% (compares with Q4's 9%). EPS guidance of $9.00-$9.60 is below a $9.61 consensus, but (as Q4 results show) Priceline has a history of issuing conservative EPS outlooks.
- Q4 top-line performance: International revenue (89% of total revenue) rose 15.9% Y/Y (29% exc. forex) to $10.7B; U.S. revenue fell 7.6% to $1.3B. Agency revenue rose 15.3% to $10.3B; merchant revenue fell 0.9% to $1.7B.
Room nights booked rose 26.6% to 99.1M, an improvement from Q3's 22% growth and the highest growth rate seen since Q3 2014. Rental car days +10.6% to 12.2M vs. +13% in Q3. Air tickets -2.6% to 1.7M vs. -1.1% in Q3.
- Financials: GAAP operating expenses rose 11% Y/Y to $1.22B - $582M was spent on online ads (much of it going to Google), $33.4M on offline ads, $83.7M on sales/marketing, $106.6M on G&A, $32.3M on IT, $70.7M on depreciation/amortization, and $312.6M on "Personnel" expenses, including stock compensation.
Priceline ended Q4 with $2.6B in cash, $7.9B in long-term investments, and $6.2B in long-term debt.
- Priceline's Q4 results, earnings release
Thu, Feb. 11, 9:13 AM
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Expedia, Inc. is an online travel company. The company provides travel products and services to leisure and corporate travelers, including travel agencies, tour operators, travel supplier direct websites and call centers, consolidators and wholesalers of travel products and services, large... More
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