Cantor Fitzgerald Sees 'Strong' Q2 Results Out Of Expedia

Expedia Inc (NASDAQ: EXPE) is scheduled to announce its second quarter financial results after the market closes on Thursday. In a report rolled out Tuesday, Cantor Fitzgerald analysts Naved Khan, Youssef Squali and Kip Paulson looked into the company ahead of the report and reiterate a Buy rating and $120.00 price target.

The analysts anticipate strong results, with earnings of $1.07 per share on revenue of $1.646 billion, with FX resulting in a $29 million contribution to sales and a ~$0.04 positive impact on EPS. These estimates compare to the Street’s consensus of $0.85 per share and $1.661 billion.

The firm’s checks show that paid clicks to Expedia.com surged nicely in the second quarter, about 22 percent year-over-year. The analysts “view the healthy growth in paid click activity to be indicative of higher ad spending on Google's paid search to capitalize on an improved traffic conversion/ROI.”

The checks also suggest that, over the quarter, visitation to Hotels.com and Trivago also increased, same as hotel room rates, which continued to rise on a year-over-year basis (FX-neutral) across the U.S. and Europe. However, travel-related commentary from Google Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) and Tripadvisor Inc (NASDAQ: TRIP) has been somewhat mixed this quarter.

Given the FX headwinds, however, Cantor expects management to guide conservatively and reiterate previous guidance for year-over-year EBITDA growth in the 10 to 15 percent range (excluding eLong and including a 700bps hit from FX).

Shares of Expedia rose 2.1 percent on Tuesday.