Citi cuts estimates on Expedia amid macro uncertainty

Jun. 16, 2022 7:17 AM ETExpedia Group, Inc. (EXPE)ABNBBy: Kevin P. Curran, SA News Editor1 Comment

Family in protective face masks in airport during COVID-19 pandemic

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Despite soaring travel demand, a slew of headwinds are clouding the path ahead for Expedia Group (NASDAQ:EXPE), according to Citi analyst Ronald Josey.

He cited growing macroeconomic uncertainty, geopolitical risks, and inflationary pressures hitting lodging and airfares in particular as significant headwinds. As the third and fourth quarter are generally slower months for travel demand, the expected record summer surge in travel may not make up for the slowdown anticipated as consumer confidence deteriorates into a typically quieter fall and winter travel trend.

“From a travel perspective, domestic lodging ADRs are up 32% [year over year] for April and May, Air travel continues to improve, and we believe Expedia’s focus on fewer more profitable markets can preserve margins,” Josey acknowledged. “That said, rising macro uncertainty and the potential impact on leisure travel as we head into the seasonally slower Fall travel months keeps us on the sidelines.”

Considering the stock has fallen over 40% since the start of 2022, he expected there is not significant downside still ahead. Though, Josey expected the upside is equally limited, motivating him to slash his price target to $118 from $200. He reaffirmed a “Neutral” rating on shares.

Shares of the Seattle-based online travel company fell 1.83% in premarket trading.

Elsewhere, he remained bullish on Airbnb (ABNB) as it continues to outpace Expedia’s (EXPE) VRBO offering.

“Airbnb (ABNB) remains our top-pick as we believe alternative accommodations continue to take share of lodging overall along with improving margins,” he concluded.

Read more on recession fears eroding optimism on travel stocks.

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