Expedia (EXPE) will continued to have balanced risk/reward profile due to its "outsized exposure" to the US demand environment, which makes up around two-thirds of its revenue, Wedbush said in a Friday note.
US demand has demonstrated the greatest signs of uncertainty of softer consumer spending in the near term, Wedbush analysts said.
The company's Q1 saw mixed results, with gross bookings missing expectations, but adjusted earnings before interest, taxes, depreciation, and amortization ahead of estimates, the analysts said. Expedia attributed the modest performance to weaker-than-expected travel trends in the US, driven by declining consumer sentiment, they noted. The company cited pressure on key inbound US corridors, specifically inbound bookings from Canada, which dropped almost 30%.
The company's Q2 and full-year guidance was modestly below consensus expectations, as it expected that underlying demand trends would remain muted, particularly for the consumer business, the analysts noted. Performance has been more encouraging in the business-to-business segment, which is more broadly exposed to international markets, they said.
Wedbush reiterated the company's stock rating at neutral and lowered its price target to $165 from $180.
Price: 154.75, Change: -14.25, Percent Change: -8.43
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