Dara Khosrowshahi, Expedia Inc EXPE's veteran CEO, reportedly accepted the vacant CEO position at Uber and will be leaving the online travel agency. Shares of Expedia fell more than 4 percent following the reports, which implies Expedia's investors view Khosrowshahi's departure as a negative.
There is little doubt that Khosrowshahi's departure is a "major loss" for Expedia, but that doesn't necessarily mean the company's prospects aren't as strong, Cowen's Kevin Kopelman commented in a research report. The analyst maintains an Outperform rating on Expedia's stock with an unchanged $170 price target as the company's executive team consists of a "strong bench" with plenty of candidates suitable for the CEO spot.
For example, Mark Okerstrom, Expedia's current chief financial officer and executive vice president of operations has been with the company since 2006 and oversees all aspects of finance, corporate strategy and M&A, Kopelman noted. Also, the online travel agency's current chairman Barry Diller has been a senior executive since 2005 and remains "highly involved" in the company.
"Mr. Khosrowshahi leaving is a major loss for Expedia, which will likely sell off as a result," the analyst emphasized. "Nevertheless, we believe the company has a strong management bench and culture, with largely independent teams of seasoned executives in place running the company's major divisions."
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