Analysts gave mixed opinions on Expedia Group, Inc (NASDAQ:EXPE) post Q1 results. Credit Suisse analyst Stephen Ju maintained an Outperform and lowered the price target from $231 to $225.
The re-rating reflects 1) the decision to ramp marketing across channels as EXPE sees increasing travel demand, 2) product and technology investments, and 3) customer service efficiencies through automation.
As Ju continues the recovery, he believes EXPE should be well-positioned as its historical strength lies in urban and international travel.
Ju lowered its 2022 gross bookings and raised its marketing estimates as EXPE elevates spending against positive demand indicators.
RBC Capital analyst Brad Erickson maintained a Sector Perform and lowered the price target from $200 to $185.
EXPE continues to be a popular way to play the U.S. travel recovery, with directional bookings improvement being the main positive. At the same time, a room night miss and higher costs were the two main negatives.
EXPE remains well-positioned to benefit as developed market travel rebounds. However, Erickson believes the share prices reflect strong recovery and future margin expansion.
Andrew Boone from JMP Securities maintained a Market Perform. Expedia reported solid 1Q22 results despite bookings and EBITDA coming in 6% and 9% below consensus, respectively, as lodging bookings were above 2019 levels in February, March, and April.
Alternative accommodation demand remains strong as new travelers enter the category, with ~50% of 1Q22 customers new to Vrbo.
Expedia continues to make long-term brand investments. Marketing spending should improve as Hotels.com is consolidated onto the Expedia technology stack, A/B testing optimization continues, and Expedia benefits from its redesigned loyalty program that should improve personalization.
DA Davidson's Tom White affirmed Neutral and raised the price target from $167 to $195 following in-line Q1. The Omicron variant impacted the early part of the quarter. Still, it proved to be the shortest and least impactful variant thus far.
The war in Ukraine also had some transitory impact on EXPE's EMEA business. EXPE's EMEA business is now back to its highest level since COVID started.
The travel recovery shows signs that it's too strong to be constrained for long. Inflation and the macro are the following potential obstacles to recovery.
Price Action: EXPE shares traded lower by 13.8% at $150.71 on the last check Tuesday.
