Friday, Mizuho announced a price target reduction for Expedia Group Inc. (NASDAQ:EXPE) to $135 from $140, while keeping a neutral stance on the stock. The adjustment follows Expedia's recent financial performance, which showed solid results attributed to its One-Key initiative and heightened marketing activities.
However, the travel platform's latest quarterly report indicated some challenges, particularly with its Vrbo™ brand, which experienced slower progress than anticipated due to issues with traffic migration. Consequently, the company has revised its full-year 2024 (FY24) guidance.
Revenue growth expectations have been scaled back from 10% to mid- to high-single-digit percentages, and the forecast for EBITDA margin has been modified to remain flat year-over-year, as opposed to the previously projected increase of 75 basis points.
In light of these developments, Mizuho has also adjusted its long-term earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast for Expedia. The firm's estimate for FY26 EBITDA has been reduced by nearly 5% to $3.5 billion. The new price target of $135 is based on an 8 times multiple of the projected FY26 EBITDA.
The investment firm's neutral rating persists, with the indication that a more positive outlook on Expedia's stock could emerge if the One-Key initiative demonstrates the ability to drive sustainable double-digit growth. Mizuho's commentary underscores the importance of future performance indicators in shaping analyst expectations and investor sentiment toward Expedia.
InvestingPro Insights
As Expedia Group Inc. navigates through its current challenges and revised forecasts, real-time metrics from InvestingPro shed light on the company's financial health and market performance. With a market capitalization of $18.03 billion and a P/E ratio that has adjusted to a more attractive 15.25 over the last twelve months as of Q1 2024, Expedia presents a compelling case for investors considering the company's valuation relative to its earnings growth.
InvestingPro Tips highlight Expedia's aggressive share buyback strategy and its high shareholder yield, which may appeal to investors looking for companies actively returning value. Additionally, the company's gross profit margins stand at an impressive 88.39%, indicating strong operational efficiency. These factors, coupled with a notable 50.26% price total return over the past year, paint a picture of a company that, despite its short-term obstacles, has shown resilience in its market performance.
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