DA Davidson Turns Bullish On Tripadvisor

DA Davidson initiated coverage of online travel platform Tripadvisor Inc (NASDAQ: TRIP) in early 2018 with a Neutral rating, a stance that remained unchanged until Thursday.

The Analyst

DA Davidson's Tom White upgraded Tripadvisor from Neutral to Buy with an unchanged $55 price target.

The Thesis

The case for turning bullish on Tripadvisor after more than a year sitting on the sidelines is based on a few key points, according to White.

Tripadvisor's initiatives to lower its reliance on ad spend from large online travel agencies (OTA) is showing signs of progress. For example, Expedia (NASDAQ: EXPE) and Booking's (NASDAQ: BKNG) platforms combined for 52% of Tripadvisor's Hotel segment revenues in 2018, which is down from 57% in 2016. New monetization initiatives outside of OTAs should help the favorable trend continue in the years to come.

White said first-hand checks into Restaurant Ads shows adoption continues to rise and implies growing consumer appeal. Tripadvisor's Experiences and Attractions businesses grew more than 40% year over year, which bodes well for the future of the $159 billion global industry that's still 80% booked offline.

Tripadvisor's social newsfeed is a very low risk and low-cost initiative to generate new monetization through usage and page views on the core platform.

Price Action

Shares of Tripadvisor traded higher by 5.1% to $46.30 at time of publication.

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