Oggonomics has been featuring Wall Street’s top calls for 2025 looking into market calls from strategists and analysts alike. Many firms have views which may actually look like polar opposites of other calls. But outside of those stand-out calls, there are some predictions for significant upside above just the 8% to 10% calls for the S&P 500.
BofA Securities has decided to upgrade Expedia Inc. (NASDAQ: EXPE) to Buy from Neutral, and the firm’s old $187 price objective was raised by 18% up to $221. If the firm’s price objective comes to fruition this represents about 22% upside from its prior $180.64 close.
BofA Analyst Justin Post at BofA identifies Expedia as BofA’s top Internet value stock over other travel services rivals. Post is actually favoring Expedia quite heavily against those rivals.
EXPE VS. BKNG/ABNB
The call maintained a Neutral rating on Booking Holdings, Inc. (NASDAQ: BKNG) but he raised the price objective to $5,522 from $4,850 in this call. His rating on Airbnb, Inc. (NASDAQ: ABNB) also remained at Neutral and Post raised his price objective to $159 from $154.
AND SPECIFICALLY…
Several factors are at play here for this significant Expedia upgrade. Expedia’s revenue per room (RevPAR) and the bank’s own aggregated credit card and debit card data are showing early signs of improving trends for US travel metrics heading into 2025.
Another boost is that the comps in 2025 look easy over a choppy 2024. Post’s report noted that Expedia seems to have very achievable consensus estimates for 10% EBITDA growth in 2025.
Another boost is a new CEO (Ariane Gorin) and what looks like better messaging and execution ahead could drive longer term investors to revisit the stock.
Expedia’s EV/EBITDA discount to Booking is too steep — now 8x for Expedia and 19x for Booking using 2025 expectations. Expedia also has a 10% FCF yield-equivalent based off of 2025 estimates.
MORE TARGETED DATA FOR 2025
Post also lowered Expedia’s expense estimates for the cost cutting initiatives outlined in a recent filing. As for sentiment, Post’s report said:
We think long-only sentiment is cautious on Expedia, and a new management team with better execution could reignite interest and drive multiple expansion.
Expedia was also featured for potential deal speculation. Post’s report said:
With Expedia stock valued at 10x 2025 FCF, we expect potential acquirors and private equity first to maintain some interest in the company. Also, we see potential for deals with mobility companies for ride share, and restaurant delivery apps during trips. At the very least, we note that Expedia could potentially buyback 8-10% of its stock each year at current valuations. We think, at 10x FCF, Expedia is valued for little to no annual growth.
Other firms on Wall Street have been positive on Expedia over the last 6-week period as well, but BofA seems to be among the highest of the recent price targets. Baird started Expedia as Outperform and set a $225 price target on November 27, but here are some other targets that have been seen over last few weeks:
- Benchmark (to $200 from $180)
- BTIG (to $200 from $175)
- DA Davidson (to $190 from $135)
- Morgan Stanley (to $180 from $150)
- Susquehanna (to $190 from $145)
- Wedbush (to $180 from $130)
Expedia’s reaction was last seen up 0.3% at $181.00 on Wednesday. Finviz shows the current consensus price target at $188.52 and its 52-week trading range is $107.25 to $192.34.
DISCLAIMER/WARNING
Oggonomics always reminds investors and its readers that no single analyst report should ever be the sole basis to buy or sell a stock. The same is true for multiple analyst reports reacting to news. Any decision to buy or sell (or hold or short sell) is up to each investor and that decision should be made with a financial advisor.
Oggonomics maintains no formal ratings nor formal price targets of its own on Expedia or any other companies mentioned in this report.
