Expedia Inc Q3 Results and Outlook

Investing.com — Expedia Inc (NASDAQ:EXPE) reported mixed Q3 results and guidance on Thursday, indicating ongoing subdued growth that may limit earnings potential through 2025, according to analysts at Deutsche Bank in a Friday note.

While analysts expect a "modest improvement" in bookings, revenue growth, and margin leverage in 2025, they believe this improvement will not be enough to drive higher multiples into 2025.

Analysts highlighted that sluggish growth in Expedia’s B2C business, despite increased investments, is likely to hinder the company's earnings growth in 2025, leading them to downgrade Expedia to Hold from Buy.

Expedia's Q3 bookings and adjusted EBITDA marginally exceeded expectations, while revenue fell slightly short, with B2C revenue declining by 140 basis points year-over-year in Q3.

Moreover, the share of direct marketing within gross bookings has "continued to de-lever" due to increased investments in Vrbo, HCOM, and international markets.

Analysts foresee a modest improvement in bookings, revenue, and adjusted EBITDA growth, but caution that these estimates carry risks stemming from muted underlying B2C bookings growth, challenging comparisons for Vrbo in the latter half of 2025, and limited visibility on marketing leverage.

Looking ahead to Q4, Expedia provided mixed guidance: bookings and revenue are slightly ahead, while adjusted EBITDA marginally missed consensus estimates.

However, given that Expedia shares are trading at "16x our 25 GAAP EPS, EXPE's discount relative to Booking Holdings Inc (NASDAQ:BKNG) exceeds its average range, and EXPE is near the high end of its two-year trading range, we find that the risk/reward is balanced," the analysts noted, raising the target price for the stock from $150 to $192 per share.