Expedia Posted Strong Earnings. What Wall Street Is Saying About the Stock.

Expedia posted better-than-expected adjusted earnings and sales in the second quarter and boosted its guidance. (Photograph by Yu Kato)

Shares of Expedia Group got a boost on the heels of the online travel agency’s second-quarter earnings, but analysts have varying degrees of optimism about the prospects for growth.

Expedia posted adjusted earnings per share of $4.24, above the $3.97 analysts had expected. Sales increased 6% to $3.79 billion compared with analyst estimates for $3.71 billion.

Gross booking value—a metric encompassing bookings across Expedia.com, Hotels.com, and VRBO—grew 5% to $30.41 billion in the quarter, also topping the $29.81 billion Wall Street had forecast.

On the back of what CEO Ariane Gorin dubbed a “solid second quarter,” Expedia hiked its guidance. The company now expects full-year revenue growth of 3% to 5%, up from an earlier range of 2% to 4%.

J.P. Morgan analysts lifted their target price on Expedia stock on Friday to $225 from $170 while reiterating a Neutral rating. J.P. Morgan has never been bullish on the shares, having initiated coverage on Expedia in late 2022 at Neutral.

While the overall print was solid, and the company provided third-quarter guidance that was “better than feared,” analysts noted that Expedia’s business-to-consumer segment remained challenged. Both Hotels.com and VRBO are undergoing an “ongoing recovery from headwinds caused by a multi-year tech migration,” which is offsetting Expedia’s otherwise strong performance, J.P. Morgan posited.

Moreover, the macro remains challenged. While Expedia saw an uptick in overall travel demand in July, particularly in the U.S., management cautioned that things will get tougher in the second half of the year. J.P. Morgan pointed out that this echoed commentary from industry peers Booking Holdings and Airbnb.

“EXPE’s results show that it is executing well across areas of strength, even as its core market faces macro headwinds,” J.P. Morgan analysts wrote, adding, “we look for signs of sustained & broad-based improvement in execution.”

Other coverage was more optimistic, as Melius Research analyst Conor Cunningham raised the price target on Expedia stock to $210 from $205, and reiterated a Buy rating. Melius had upgraded Expedia stock in January from Hold “on the idea that the transformation would start to bear fruit and the new management team has the ability to capitalize on a turnaround story.”

The first half of the year shaped up to be a disappointment as travel was battered by macro uncertainty. Expedia was particularly hard-hit due to its exposure to the U.S. market. “But ultimately the strategy didn’t need altering, rather just a supportive backdrop,” Cunningham wrote. “With demand trends improving in July from peak uncertainty in April, leverage in the model is starting to become more visible.”

If demand and execution continue, “there is a longer-term upward revision story at play,” and Expedia “has the potential to continue to chip away at closing the margin gap to peers,” he added.

Evercore ISI analysts similarly raised their price target on Expedia stock to $280 from $230 and reiterated an Outperform rating. The stock appears to be “gaining altitude” in the wake of a beat-and-raise, analysts quipped.

Opinions on the Street are mixed. Of 37 firms polled by FactSet, 15 rate Expedia at Buy or the equivalent, 21 are at Hold, and one is at Sell.

Barron’s selected Expedia as a stock pick in October 2024, arguing that shares were poised to rebound following a lackluster year and the departure of former CEO Peter Kern. Since then, the stock has gained 24% through Thursday’s close. Shares were up 8% at $202.53 in Friday trading.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com