A ‘brighter year ahead’ were the words Expedia (NASDAQ: EXPE) used following better-than-expected Q4 results on Thursday. According to the popular travel company, the Omicron variant didn’t constrict the travel sector as much as previous Covid-19 restrictions, spurring a welcomed rise in bookings of $17.5B in Q4, an 131% increase year-over-year but still down 25% from Q4 2019 – which is expected, but marks the lowest quarterly loss since the start of the pandemic.
Off the back of a promising outlook, analysts across the board have raised price targets on Expedia – with a resurgence in travel confidence being a critical theme as we look to the coming months. Piper Sandler analyst Thomas Champion raised the firm’s price target to $231 from $216, maintaining the firm’s Overweight rating. Again, although Omicron inevitably weighed on the success of Expedia, investors tend to pay more attention to the forthcoming fiscal outlook, with Champion referring to management’s ‘upbeat’ tone suggesting a bounceback in travel.
Similarly, Benchmark analyst Daniel Kurnos followed suit with a price target raise from $220 to $265, holding the firm's Buy rating on the company. Although gross bookings posted a quarterly miss, the lowest annual quarterly decline acted as a bullish catalyst. Kurnos also found that managements comments enabled the ‘real upside’, with Expedia stating that booking trends are returning in force in comparison to pre-pandemic levels.
Pandemic boredom also has a vital part to play here. Avid travelers are becoming antsy and increasingly eager to go abroad. Credit Suisse analyst Stephen Ju touched on this after raising the firm's target to $231 from $205 – with Expedia claiming consumers are becoming more resilient to variant fears, with each variant posing a weaker threat. Expedia’s internal shift is also earning the company recognition, as it attempts to centralize its marketing, tech, product, and data engineering whilst consolidating brands.
The travel sector seems to finally be on a rebound, with optimism returning once again to the market. EXPE stock is currently trading around all-time highs and hence might not provide the best risk/reward for investors looking to profit from the travel bounce – but it is a welcomed change to see companies feeling positive about the future.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.