Pacific Crest Securities has added two new stocks to its portfolio and will be providing perpetual analysis from now. The two new additions to watch list belong to the online travel industry namely, Priceline Group (NASDAQ:PCLN) and Expedia (NASDAQ:EXPE). Pacific Crest analyst Brad Erickson initiated the coverage by giving both the tickers a Sector Weight rating.
Regarding PCLN the analyst was a bit more positive and believes that the valuation is full. He sees potential for upside as the recent trends suggest a shift from offline travel bookings to online. The online travel agencies have also been gaining market share owing to direct-supplier bookings facility. Despite the positivity, the analyst doesn’t see much room for upside or multiple expansion as the current multiple is a little on the higher side compared to the industry’s average. The analyst has decided to remain on the sidelines as he expects a pullback to become positive on the stock.
The analyst remained largely conservative about Expedia (NASDAQ:EXPE) stating that the company’s already high multiple presents little room for expansion. Deceleration in key fundamentals and untidy acquisition integrations lacking due diligence remain among the top concerns of analysts and investors alike. The EBITDA expectations for the first half of current year remain practically out of reach. He advised investors to wait for a better time to invest in the company.
Mr. Erickson interacted with a total of 45 hoteliers, 20 of whom belonged to the US while the remaining 25 had their business in UK. The summary of the results indicated a significant shift from direct bookings to online travel agencies (OTAs) and that Airbnb has not been able to reverse the shift towards OTAs.
The analyst opinion on EXPE has five strong Buy, 12 Buy, nine Hold and one sell ratings. The ratings for PCLN are 5 strong buy, 14 buy, 10 hold. The current trading price of EXPE stock is $107.54, while, PCLN is trading at $1,309.4.