Expedia's Q2 Triumph: Analysts Highlight Vrbo As 'Bright Spot,' Praise Growth In Business Partnerships

Shares of Expedia Group Inc (NASDAQ:EXPE) skyrocketed in early trading on Friday, after the company reported upbeat second-quarter earnings.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

Goldman Sachs On Expedia Group

Analyst Eric Sheridan maintained a Buy rating, while raising the price target from $182 to $200.

Expedia reported "solid" second-quarter results, with higher-than-expected gross bookings that were "driven more by room nights than ADRs," Sheridan said in a note. The company delivered a revenue beat on the back of strong B2B growth, he added.

Expedia's margins were also better than expected, the analyst stated. "Similar to other covered companies in online travel, EXPE mgmt flagged softness in travel demand in July due to macroeconomic conditions," while projecting 4% year-on-year growth in gross bookings, 6% in revenues, and stable adjusted EBITDA margins in 2024.

Wedbush On Expedia Group

Analyst Scott Devitt reiterated a Neutral rating, while lifting the price target from $125 to $130.

Despite strong second-quarter results, Expedia provided disappointing guidance for the third quarter and the full year, Devitt said. Room night growth of 10% year-on-year came in around 200 basis points (bps) higher than Street estimates, with 20% growth in the Brand Expedia segment, "while Vrbo was also a bright spot," he added.

Outperformance in the second quarter "should partially offset weaker demand trends" in the back half of the year, the analyst stated. "As a result, on a full-year basis, our 2024 room night growth estimate moves down by less than 1%," which is a more modest revision compared to the estimates for Booking Holdings Inc (NASDAQ:BKNG) and Airbnb Inc (NASDAQ:ABNB), he further said.

Piper Sandler On Expedia Group

Analyst Thomas Champion reaffirmed a Neutral rating, while cutting the price target from $145 to $140.

While second-quarter results were above expectations, the full year guidance was lowered again, Champion said. Despite this, the stock rose around 10% in the after-hours session, which indicates that investors "view the commentary as conservative," he added.

Bookings came in at $28.8 billion, with growth accelerating to 6% year-on-year, from 3% in the first quarter, the analyst stated. "B2B continues to be strong and VRBO declines did slow in the quarter, but EXPE did talk to consumer weakness that emerged in July in particular in the U.S.," he further wrote.

Considering buying Expedia stock? Here’s what analysts think:

RBC Capital Markets On Expedia Group

Analyst Brad Erickson maintained a Sector Perform rating and price target of $140.

Expedia's second-quarter report represents a substantial sequential improvement, "though partially dampened by the Q3 macro softness others in the space have spoken to," Erickson said. The headline was grabbed by Vrbo, which "finally returned to growth," after being a “key overhang on the stock,” he added.

Over the past two year, the company has been underperforming its peers on bookings and room nights "and so at some point, reversion seemed inevitable," the analyst stated. "Forward execution will obviously decide what exactly this is but we’d expect some investors to question durability of this recovery," he further wrote.

Oppenheimer On Expedia Group

Analyst Jed Kelly reiterated a Perform rating and price target of $155.

Vrbo grew in June, "implying the segment is benefiting from early marketing initiatives and easing comps," Kelly said. Expedia's full-year guidance implies revenue growth of around 6% year-on-year in the fourth quarter, which sets the bar into 2025, during which the B2B segment is expected to sustain double-digit growth and stable Vrbo nights, he added.

"Faster growing B2B segment is benefiting gross margins (+190bps y/y) but its revenue share agreements are driving a fair amount of direct marketing deleverage (-300bps y/y)," the analyst further wrote.

Benchmark On Expedia Group

Analyst Daniel Kurnos reaffirmed a Buy rating and price target of $180.

"After a slew of weak reports," Expedia reported "a surprisingly good quarter," Kurnos said. The headlines were room-night growth of 10%, including 20% growth at Brand Expedia, and Vrbo's return to growth by the end of the quarter, he added.

Although this was not a "blowout quarter by any means," the company recorded the fastest growth rate since the first quarter of 2023, the analyst stated.

EXPE Price Action: Shares of Expedia Group were up 8.3% to $127.76 at the time of publication on Friday.

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