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Expedia (EXPE) Hits 52-Week High on Impressive '17 Guidance

Zacks Equity Research
Updated

Share price of Expedia Inc. EXPE rallied to a new 52-week high of $152.83, eventually closing a tad bit lower at $152.00 on Jun 22.

Currently, the company has a Zacks Rank #3 (Hold). Notably, the stock has a market cap of $22.94 billion.

Key Factors

The rally in the stock can be attributed to Expedia’s positive guidance and improving loss figure. Management expects EBITDA growth rate including the ramp-up in cloud spending for full-year 2017 to be in the range of 10% to 15%. Excluding cloud expenses, it is expected to be in the range of 14% to 19%.

Additionally, management trimmed the capital expenditure (CapEx) forecast a bit. It expects CapEx excluding cost related to its headquarters project to be down year over year. Depreciation expense is expected to rise in the mid-20% range. However, the rate of increase will decelerate from the first quarter through the end of the year.

Expedia’s narrower-than-expected first quarter loss and 15% year-on-year revenue growth are also positives. The company’s impressive first-quarter results backed the share price momentum.

However, we note that the company has underperformed the Zacks Electronics Commerce Market on a year-to-date basis. While the industry gained 42.9%, the stock returned 34.8% over the same time frame.



Moreover, trivago TRVG, Egencia and HomeAway grew 62.5%, 11.8% and 30.3%, respectively on a year-over-year basis in the first quarter. Though the revenue growth trend looks promising, cloud spending, estimated at $110 million for 2017, remains a concern.

Expedia, Inc. Revenue (TTM)

Expedia, Inc. Revenue (TTM) | Expedia, Inc. Quote

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Estimate Revisions

The Zacks Consensus Estimate for fiscal 2017 remained unchanged at $4.18 over the last 30 days. For fiscal 2018, the consensus estimate remained unchanged at $5.69 over the same time period.

Stocks to Consider

Better-ranked stocks in the broader computer-software market include Applied Optoelectronics, Inc. AAOI and Applied Materials, Inc. AMAT, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

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Zacks Investment Research