Needham Downgrades Tripadvisor After CFO Resignation

Needham issued a report on Monday after Tripadvisor Inc (NASDAQ: TRIP) announced the unexpected resignation of its CFO Julie Bradley to spend more time with her family. Needham downgraded Tripadvisor from Buy to Hold while a price target is currently unavailable.

Analysts Laura Martin and Dan Medina wrote, "we worry that the timing of the departure on April 2, just two days after the end of 1Q15, could indicate that 1Q was weaker than we feared, with the company seeking to place responsibility with this executive. This stock can be brutally volatile on its EPS earnings days...we liked Bradley's CFO track record for the past 4 years, and this unexpected event adds uncertainty (i.e., requires a higher discount rate) while a new CFO is found."

Related Link: SunTrust Reduces TripAdvisor's Earnings Estimates

Acquisitions have been a key revenue growth driver for Tripadvisor as the company has purchased an average of two to three companies per quarter since Bradley arrived in 2011. Tripadvsior's strategy is to be an end-to-end solution, a one-stop shopping site for each visitor's travel plans, which could be hurt as acquisition activity may slow down during the search for a new CFO, the firm noted.

Another concern for the company going forward is that Tripadvisor gained 44 percent of its traffic, but only 15 percent of its revenues from mobile devices. The issue of how to convert mobile traffic to revenue will be a major challenge going forward.

Shares of Tripadvisor traded recently at $82.01, down 0.6 percent.