Bank of America Names Expedia Top Internet Value Stock, Raises Price Target
Bank of America has identified Expedia as its top internet value stock, signaling strong growth potential for the online travel giant. The financial institution has increased its price target for Expedia shares to $221, suggesting a 21% upside from current levels.
Analysts attribute this optimistic outlook to improving US travel trends and potential enhancements under new leadership. The US travel sector is showing signs of recovery, with increased spending on lodging and a 3.6% rise in revenue per available room this quarter. These trends indicate a potential rebound in travel among US consumers, with analysts suggesting that post-election consumer confidence could further boost US domestic travel in 2025.
Despite facing challenges earlier in the year, including VRBO missing expectations and Hotels.com experiencing a drop in bookings, Expedia has taken strategic steps to address these issues. The company increased marketing spend and offered discounts, which impacted revenue and margins in Q3. However, analysts believe these adjustments could set the stage for improved sales performance in the future.
Under the leadership of new CEO Ariane Gorin, who took over in May, Expedia has introduced new features to enhance user experience. The company has also expanded its advertising capabilities, with ad revenue increasing by 32% in the third quarter. Analysts see potential for significant advertising revenue growth, estimating an additional $200 million in ad growth by 2025.
Expedia’s stock has risen by 24% this year, with much of the growth occurring after Gorin was appointed CEO. Gorin, previously head of Expedia’s B2B business, is focused on rebuilding the management team with new technology and finance leaders.
As the travel industry continues to evolve, Expedia’s strategic adjustments and new leadership appear to be positioning the company for potential growth, attracting positive attention from major financial institutions like Bank of America.
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