Deutsche Still Has Reservations About Trivago, Prefers Expedia

Trivago NV – ADR TRVG is off to a solid start as its own public company after being spun off by Expedia Inc EXPE in mid-December. However, Deutsche Bank analyst Lloyd Walmsley believes investors should stick with the parent company for the time being.

Walmsley is impressed by the business Trivago has built, but he sees the stock as fully-valued at its current price.

Stick With The Parent On This One

Despite cutting his earnings estimates and price targets for Expedia, Walmsley still sees more upside in the parent company.

“Higher revenue estimates at Trivago and use of a revenue multiple result in a higher valuation to Expedia despite lower profit contribution,” Walmsley explained.

Deutsche Bank is projecting 14 percent organic room night growth from core Expedia.com and Hotels.com rooms in Q4 and 14–16 percent growth in 2017.

In addition, Walmsley is optimistic that Project Attach can be a revenue driver for Expedia. The shopping cart allows users to combine air, hotel and car travel products into a shopping cart and easily see how much they can save by bundling products.

Deutsche Bank maintains a Buy rating on Expedia and a Hold rating on Trivago. The firm has a $136 price target for Expedia and a $13 price target for Trivago.