Following its profitable second quarter results, Expedia has got an optimistic assessment for its performance and share. (8/13/2007)
According to an AP report, Banc of America Securities analyst Brian Fitzgerald acknowledged that the company’s US bookings accelerated in the second quarter and should continue to accelerate in the third and fourth quarters. “Looking abroad, Fitzgerald expects growth in online European travel to greatly help the online travel company and pegged that opportunity at $63 billion. Fitzgerald noted that Europeans typically have more vacation time per year than Americans, and expects the European online travel market to expand at a quick pace,” according to the report.
As per the same report: “A low stock price, international opportunities and strong growth in domestic bookings are some reasons”, which resulted in “Buy” rating from Fitzgerald for Expedia. “We believe the current share price represents an attractive entry point, given the inflection point in domestic gross bookings growth, the improving gross margin and the increasing contribution from faster growing Europe and higher margin advertising revenue,” Fitzgerald wrote in a client note.
Fitzgerald’s $35 price target implies nearly 26 percent upside to the stock’s $27.79 closing price Wednesday.
Online travel agency Expedia’s second-quarter net income rose to $96.1 million, or 30 cents a share, from $95.5 million, or 27 cents per share a year earlier. Gross bookings increased 14 percent for the second quarter of 2007 compared with the second quarter of 2006.
Revenue increased 15 percent for the second quarter, primarily driven by increased worldwide merchant hotel revenue and advertising and media revenue, partially offset by a decline in North America air revenue. North America revenue increased 11 percent, Europe revenue increased 30 percent (23 percent excluding the impact of foreign exchange) and other revenue increased 28 percent.