On Monday, Wells Fargo revised its outlook for: Expedia Group Inc. (NASDAQ:) has lowered its price target to $149 from $155 while maintaining an equal weight rating on the stock. This revision reflects a conservative stance as we expect a decline in gross bookings and see trends in traffic and average daily rates (ADR) slowing as the first quarter draws to a close. .
The company maintained Expedia's forecast for the first quarter of 2024, but lowered its forecast for total bookings for the second quarter of 2024 and the full year by 2% and 1%, respectively. This adjustment can be attributed to the observed weakening of traffic and ADR trends.
As a result, the company's EBITDA estimates for the second quarter and full year of 2024 decreased by 3% and 4%, respectively. The expected decline in EBITDA is partially mitigated by expected lower sales and marketing (S&M) expenses.
Wells Fargo's revised price target of $149 is based on a valuation that suggests Expedia's expected 9.0x 2025 EBITDA of $3.2 billion. Despite the lower price target, the company maintains an equal weight rating, indicating a neutral view on the current stock valuation.
Wells Fargo analysts took a cautious stance ahead of Expedia's first-quarter earnings report, suggesting that a trend toward weaker bookings could weigh on the travel company's near-term outlook.
Investment Pro Insights
As investors consider the cautious outlook Wells Fargo has provided for Expedia Group (NASDAQ:EXPE), real-time data from InvestingPro provides a broader perspective on the company's current financial health. To do. Expedia's market capitalization is a solid $18.77 billion, as of Q4 2023, and the company has an impressive gross profit margin of 87.75% over the past 12 months. Despite concerns about near-term booking trends, Expedia's revenue growth remains positive. It grew by 10.05% over the past 12 months, resulting in a quarterly growth rate of 10.28% in Q4 2023.
InvestingPro Tips highlights that Expedia's management is actively buying back shares, which could be a sign of confidence in the company's future. Additionally, the company trades at a low P/E relative to its near-term earnings growth, with an adjusted P/E of 16.62 as of Q4 2023. This could indicate that the stock is undervalued given its earnings potential. It's worth noting that Expedia doesn't pay dividends and is focused on reinvesting its earnings into the company's growth.
For investors seeking a more comprehensive analysis, more than 10 additional InvestingPro Tips are available and can be accessed at https://www.investing.com/pro/EXPE. These tips provide a deeper dive into Expedia's financials and market performance, including insights into Expedia's debt levels and stock price volatility. Enhance your investment research at Expedia with a coupon code pro news 24 Get an extra 10% off annual or biennial Pro and Pro+ subscriptions.
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