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BofA Securities analyst Justin Post upgraded Expedia Group, Inc. (NASDAQ:EXPE) to Buy from Neutral and raised the price target to $221 from $187.
The analyst says that U.S. bookings, reported OTA nights, and RevPAR data had been trending at low single digits in 2024, but he is seeing early signs of modest improvement, which may indicate a normalization in domestic leisure travel spending into 2025.
While Expedia faced sentiment challenges due to soft B2C nights growth and revenues (-1% in the third-quarter of 2024) compared to peers, the analyst notes trends can improve in 2025 due to easier comps and better positioning at VRBO and Hotels.com.
Post says that he is more confident that Expedia can meet Street expectations for 10% EBITDA growth in 2025, supported by improving U.S. consumer sentiment post-election and a growing contribution from advertising, which rose 32% in the third-quarter 2024 and could account for 3 points of EBITDA growth next year.
Lastly, long-only sentiment remains cautious on Expedia, but a new management team with stronger execution could reignite investor interest and support multiple expansion, adds the analyst.
Investors can gain exposure to the stock via Invesco Leisure and Entertainment ETF (NYSE:PEJ) and Amplify ETF Trust Amplify Travel Tech ETF (NYSE:AWAY).
Price Action: EXPE shares are up 2.73% at $185.58 at the last check Wednesday.
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