Expedia Faces Challenges: Analysts Concerned About Vrbo’s Slow Start and B2C Growth
Benchmark analyst Daniel Kurnos reiterated Expedia Group (NASDAQ:EXPE) with a Buy and a $180 price target.
Expedia reported first-quarter sales of $2.89 billion, up by 8.4% year-on-year, beating the analyst consensus estimate of $2.81 billion. EPS loss of $(0.21) beat the analyst consensus estimate of loss of $(0.24).
Kurnos noted that Expedia didn’t benefit from having a better gross bookings outlook for the year compared to Booking Holdings Inc (NASDAQ:BKNG). Instead, it faced a softer start in 2024 for Vrbo and slower-than-expected growth in its core B2C, leading to an immediate reduction in fiscal 2024 guidance.
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Unfortunately, the analyst noted that due to the lower expected revenue and additional marketing spend to boost Vrbo, the narrative that Expedia can’t compete and expand margins is likely to resurface today.
With the lowered guidance, a February reduction in force, and over $4 billion remaining for buybacks, Kurnos says the downside risk now seems more limited to macroeconomic factors.
Wedbush analyst Scott Devitt maintained Expedia with a Neutral and lowered the price target from $130 to $125.
Devitt noted that shares were down ~9% after-hours, broadly reflecting elevated investor concerns as second-quarter and fiscal 2024 guidance were revised lower, primarily impacted by slower-than-expected traffic growth and conversion at Vrbo and Hotels.com following the company’s unified
tech stack migration. As a result, Expedia guided second-quarter Y/Y gross bookings growth in the mid-single digit range (below Devitt’s prior estimate of +10% Y/Y) and full-year guidance of mid- to high-single-digit growth …
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