Proactive Investors - Analysts at Wedbush have lowered their price target on Expedia (NASDAQ:EXPE) Group Inc (NASDAQ:EXPE, ETR:E3X1) on its mixed first quarter financial results and weak guidance.
The analysts lowered their price target from $130 to $125 and repeated their ‘Neutral’ rating on the stock.
Expedia Group shares traded down 14.1% at about $117 on investor concerns about the company’s 2Q and full-year guidance.
For 2Q, Expedia guided year-over-year gross bookings growth in the mid-single digit range, below the Wedbush analysts’ estimate of 10% growth.
For the full year, it expects mid to high-single-digit growth year-over-year growth, below the consensus of a 9% increase.
The accommodation group’s guidance reflects the drag on its performance from its vacation rental division Vrbo following the company’s unified tech stack migration.
“Vrbo’s recovery following the recent re-platforming has been slower than anticipated, which has put pressure on gross bookings,” Expedia CEO Peter Kern said in a statement accompanying the company’s results.
For 1Q, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $75 million above expectations while gross bookings were 1% below estimates.
The Wedbush analysts wrote that execution risk remains an overhang on Expedia’s shares as results continue to underperform expectations.
“Expedia has now missed consensus gross bookings estimates for four consecutive quarters, and following management's negative revision for 2Q and 2024 guidance, we believe the near-term growth trajectory is uncertain as the company struggles to sustainably improve growth and materially raise traffic at two of its core brands Vrbo and Hotels.com,” they wrote.
They highlighted that Expedia is balancing investments to support international expansion and the adoption of its rewards program One Key as part of its strategic shift to focus on higher lifetime value customers.
“Management also remains focused on cost discipline, and in February, Expedia announced a reduction in force that will impact about 1,500 employees,” they wrote.
“While the company expects to observe substantial cost savings through the year, guidance implies 2024 adjusted EBITDA margin that is flat year-over-year as cost actions are largely offset by greater investments to support underlying initiatives in the business.”
On the report’s readthrough for alternative accommodation platform Airbnb (NASDAQ:ABNB) Inc (NASDAQ:ABNB, ETR:6Z1), the analysts see Airbnb as “relatively better positioned” heading into its 1Q results given the underlying strength in the alternative category and relatively better web traffic growth.
“Management highlighted that broadly, demand has been relatively strong, with no clear signs of an inflection in consumer trends, consistent with commentary from Booking (NASDAQ:BKNG) Holdings Inc (NASDAQ:BKNG, ETR:PCE1),” they wrote.
“Vrbo's disappointing performance in recent quarters has largely been idiosyncratic as the company struggles to recapture share in the alternative accommodation segment.”