Rising Travel Demand Benefits Expedia, But Analyst Cautions On EBITDA Margin Deficit Vs. Competition

DA Davidson analyst Tom White reiterated a Neutral rating on the shares of Expedia Group Inc EXPE and lowered the price target from $121 to $109.
The analyst said Expedia’s 1Q results were mixed relative to consensus, with revenues a bit above and EBITDA light.
The analyst thinks that the travel aggregator continues to benefit from resilient underlying consumer demand for travel, and its 1Q results were boosted by increasing International and big city/urban travel and the Asia reopening.
The analyst noted EXPE shared encouraging details about the early results from its recently completed migration of its Hotels.com platform to the brand Expedia tech stack.
Though full benefits in terms of conversion rates, feature velocity, and lower costs from temporarily running redundant platforms will still take some months to be fully realized, the rapidly improved performance at Hotels.com would appear to be a good precedent for what investors might expect, opined the analyst.
The analyst is hopeful that the latest tech stack replatforming will not only be the last major overhaul in this area at Expedia but will also be a key ingredient in its attempt to narrow its EBITDA margin deficit versus its largest competitor.
Price Action: EXPE shares are trading higher by 4.40% at $93.10 on the last check Friday.

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