4 Reasons Not To Book Room For TripAdvisor Shares In Your Portfolio

Shares of Tripadvisor Inc TRIP lost more than 3 percent Monday morning and hit a new 52-week low of $36.75, before proceeding even lower, after analysts at Credit Suisse explained in a downgrade note why the stock still has "room to trip" lower.

Credit Suisse's Paul Bieber downgraded TripAdvisor's stock rating from Neutral to Underperform with a price target slashed from $40 to $34 amid four concerns, including:

1. TripAdvisor's TV ad expenditure is now expected to be $150 million versus a prior estimate of $115 million. This alone will result in a 10 percent decline in 2018 EBITDA and makes it more likely that 2018 will be the company's third consecutive year of declines.
2. A difficult third-quarter set-up at a time when the business needs to accelerate to achieve management's guidance of a double digit click-based and transaction revenue growth in 2017.
3. The competitive environment is becoming more intense and some peers are "significantly outspending" TripAdvisor.
4. TripAdvisor's stock implies a premium valuation versus notable peers including Priceline Group Inc PCLN and Expedia Inc EXPE and comes at a time when TripAdvisor's earnings are "deteriorating" and the company's strategic asset value is "eroding."

Investors should consider an investment in Priceline and Expedia given an expected 15 to 25 percent earnings per share growth, Bieber concluded. By comparison, it is "probable" that TripAdvisor's earnings per share will decline moving forward.

At last check, shares of TripAdvisor were down 3.76 percent at $36.48.