American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Latest News

Expedia’s cost controls offer hope, but analysts see growth hurdles ahead

by admin May 10, 2025
May 10, 2025
Expedia’s cost controls offer hope, but analysts see growth hurdles ahead

Shares of Expedia Group fell sharply by more than 8.5% on Friday after the company reported first-quarter revenue that came in below Wall Street expectations, signalling a slowdown in US travel demand.

The online travel platform posted revenue of $2.98 billion, falling short of the $3.01 billion expected by analysts surveyed by LSEG.

The decline marks a concerning signal for the broader travel industry, which had been hoping for a strong summer season.

Analysts attributed the weaker-than-expected results to economic pressures weighing on consumer spending, particularly in the United States, where Expedia generates about two-thirds of its revenue.

At least 13 brokerages reduced their price targets on the stock post the earnings announcement.

Large US presence adds to the drag as inbound travel is affected

Expedia’s performance reflects growing consumer caution in the face of elevated interest rates, lingering inflation, and geopolitical uncertainty, including the impact of ongoing trade tensions.

“It’s all just a bit more pronounced in the case of Expedia, with a bigger US presence than peers,” said BTIG analyst Jake Fuller.

According to Barclays analysts, the recent results confirm that US travel has entered a slower phase.

Piper Sandler said commentary around US inbound travel and the B2C business was “discouraging”, and suggested a “tough slog from here”.

The brokerage downgraded the stock.

“Expedia 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, lowering its price target to $165 from $180.

Analysts caution that low Canadian inbound travel to the US could dent summer play

One of the most striking data points was a nearly 30% drop in bookings to the US from Canada.

Analysts at Truist highlighted that tensions between the two countries may have begun discouraging cross-border travel.

This slump is significantly steeper than the 7% overall decline in international inbound bookings.

Analysts warned that the geopolitical strain could further dent sentiment during the summer season, especially if diplomatic ties do not stabilize.

They particularly cautioned about Canadian inbound travel to the US, which took a hit even though souring geopolitics only took hold in the final weeks of the quarter.

Core profit margin likely to be met despite weakening travel demand

Despite the gloom, Expedia Group is expected to stay on course to meet its core profit margin targets despite signs of weakening travel demand, according to a note from Oppenheimer on Friday.

The investment firm pointed to the company’s disciplined cost controls as a key factor supporting its margin resilience.

Chief Financial Officer Scott Schenkel told investors during an earnings call on Thursday that the online travel platform now anticipates its full-year EBITDA margin will expand by 75 to 100 basis points.

That marks an improvement over its earlier forecast of a 50-basis-point increase, according to a transcript from FactSet.

Despite the improved profitability outlook, Expedia revised its revenue growth guidance downward.

Management now expects revenue to rise by 2% to 4% over the full year, compared with a prior projection of 4% to 6%.

For the current quarter, the company forecasts revenue growth in the range of 3% to 5%, along with a similar 75 to 100 basis point increase in EBITDA margin.

Stock performance hinges on the macroeconomic picture

While gross bookings missed forecasts, Expedia managed to deliver adjusted earnings before interest, taxes, depreciation, and amortization above expectations.

The company’s business-to-business segment showed relatively stronger performance thanks to its wider international reach.

Still, the outlook remains tepid.

The company’s second-quarter and full-year guidance fell modestly below consensus expectations.

“While Expedia investors do value profitable growth, returning to a focus on profitable growth isn’t the messaging those investors want to hear right now, even if it is the right move,” Benchmark analyst Daniel Kurnos says in a research note.

There needs to be a better growth component to the Expedia story for the stock to really work, the analyst says.

“That said, it probably wouldn’t take much for shares to pick up some low-hanging fruit as long as the broader macroeconomic picture doesn’t get worse.”

The post Expedia’s cost controls offer hope, but analysts see growth hurdles ahead appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
Why are altcoins like IOTA, EOS, Quant, and Bitcoin Cash rising?
next post
Canada’s unemployment rate hits 6.9% as US tariffs undermine export sectors

Related Posts

Brazilian Real rebounds past 6.1 per USD amid...

December 22, 2024

Zelensky says Russian forces started fire at Russian-controlled...

August 12, 2024

An alleged gang rape shocks Italy, and provides...

February 12, 2024

Why demand for platinum and palladium is at...

March 1, 2025

Netanyahu denounces possible ICC warrants against Israeli leaders...

May 7, 2024

Why an Israel-Hezbollah war would be far more...

June 29, 2024

India ramps up global hunt for critical minerals...

February 27, 2025

The war in Ukraine in 12 key moments

February 25, 2024

Venezuela on the edge: why January 10 is...

January 12, 2025

Train collision kills at least four in Czech...

June 7, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • Saudi Arabia poised to raise September crude prices to five-month highs

      July 28, 2025
    • From $824 to over $1,300: how soaring rents are consuming American paychecks

      July 27, 2025
    • India-UK sign historic free trade deal: here’s all you need to know

      July 24, 2025
    • Talen Energy surges 25% to ATH after strategic natural gas power plant acquisition

      July 20, 2025
    • US visa bans on Brazilian judges spark diplomatic rift, cloud economic ties

      July 20, 2025

    Categories

    • Business (3,550)
    • Investing (2,686)
    • Latest News (2,024)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved