On Monday, Susquehanna adjusted its price target for Expedia (NASDAQ:EXPE), a leading online travel platform, from $120.00 to $145.00. The firm has maintained a Neutral rating on the stock. This revision comes in the wake of Expedia's fourth-quarter earnings report, which revealed bookings fell short of expectations. This shortfall was attributed to weaker air travel performance and a conservative outlook for the first quarter, which continues to be impacted by the same factor, along with challenges faced by Vrbo, Expedia's vacation rental brand.
Despite the lower-than-anticipated bookings in the fourth quarter and the subdued first-quarter guidance, Expedia's management remains optimistic about the company's revenue growth prospects for 2024. They anticipate a revenue increase of over 10% and a margin expansion of at least 75 basis points. This confidence is supported by the expected continued penetration of online hotel bookings and alternative accommodations.
Susquehanna's stance on Expedia remains cautious yet hopeful, acknowledging the company's potential in the online accommodation space. The firm's analyst cited the balanced risk/reward profile at Expedia's current market levels as the rationale behind maintaining the Neutral rating, despite the positive long-term revenue and margin outlook.
Investors and market watchers will be keeping a close eye on Expedia's performance, especially in relation to the challenges in air travel and Vrbo's operations, as well as the company's ability to capitalize on the growth opportunities within the online hotels and alternative accommodations sectors. The updated price target suggests that, while near-term headwinds exist, there is an expectation for Expedia's value to rise in the longer term.
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