Expedia Group recently released its quarterly report, causing a significant impact on the stock market as Wall Street analyzes the company’s outlook.
Mixed Fourth-Quarter Financial Results and Leadership Transition
In its report, the online travel agency revealed mixed fourth-quarter financial results. However, the major news that captured attention was the announcement of Chief Executive Officer Peter Kern stepping down. Effective May 13, Kern will be succeeded by Ariane Gorin, who has been with the company since 2013 and has held various roles.
Analyst Perspective on the Leadership Announcement
Benchmark analyst Daniel Kurnos shared his perspective on the leadership transition, acknowledging Kern’s achievements at Expedia Group while recognizing the need for further progress.
Kurnos stated, “Outside of some timing impacts, Street numbers should not change significantly. With the availability of a substantial buyback program, Expedia represents an appealing contrarian investment amid the expected dip in stock value today.” Benchmark rates Expedia as a Buy with a price target of $180.
Stock Performance
Following these announcements, Expedia stock experienced a 16% decline in premarket trading, reaching a price of $134.40.
Analysts Remain Positive on Expedia’s Succession
B. Riley Securities analysts have expressed a positive view on Expedia’s succession plans. They acknowledge that the guidance for the first quarter may seem light, but they believe that various initiatives in place could drive growth for the remainder of the year. Despite lowering their financial forecasts for the company, they have reiterated their Buy rating and set a $200 price target.
BofA Analysts Highlight Challenges Ahead
On the other hand, BofA analysts have a more cautious outlook and consider the first half of 2024 to be challenging for Expedia. They have downgraded Expedia’s rating from Buy to Neutral, adjusted their estimates, and lowered their price target to $156 from $181.
Wedbush Analysts Uncertain about Growth
Wedbush analysts have expressed uncertainty regarding Expedia’s growth prospects. They note that Expedia’s gross bookings have consistently fallen short of expectations for three consecutive quarters. The company needs to demonstrate the effectiveness of its strategies, including targeting higher-paying customers, in order to make a meaningful impact on its overall business. Despite maintaining a Neutral rating and a $130 price target on Expedia, Wedbush analysts have reduced their estimates for the first quarter. Within the online travel industry, Wedbush favors Booking Holdings and Airbnb.
Market Reaction
Following these analyst reports, Booking shares have dropped by 3.4%, while Airbnb stock has fallen by 3.7%.