DA Davidson Turns Bullish On Tripadvisor

DA Davidson initiated coverage of online travel platform Tripadvisor Inc TRIP in early 2018 with a Neutral rating, a stance that remained unchanged until Thursday.

The Analyst

DA Davidson's Tom White upgraded Tripadvisor from Neutral to Buy with an unchanged $55 price target.

The Thesis

The case for turning bullish on Tripadvisor after more than a year sitting on the sidelines is based on a few key points, according to White.

Tripadvisor's initiatives to lower its reliance on ad spend from large online travel agencies (OTA) is showing signs of progress. For example, Expedia EXPE and Booking's BKNG platforms combined for 52% of Tripadvisor's Hotel segment revenues in 2018, which is down from 57% in 2016. New monetization initiatives outside of OTAs should help the favorable trend continue in the years to come.

White said first-hand checks into Restaurant Ads shows adoption continues to rise and implies growing consumer appeal. Tripadvisor's Experiences and Attractions businesses grew more than 40% year over year, which bodes well for the future of the $159 billion global industry that's still 80% booked offline.

Tripadvisor's social newsfeed is a very low risk and low-cost initiative to generate new monetization through usage and page views on the core platform.