Investing.com — Expedia.com Inc (NASDAQ:)’s mixed third-quarter results and guidance released Thursday point to continued tepid growth that will pressure earnings power in 2025, Deutsche Bank analysts said in a Friday note.
While Expedia will likely post “modest improvement” in bookings, revenue growth and margin leverage in 2025, this will likely not be enough to keep the numbers rising in 2025, the analysts said.
Meanwhile, continued tepid growth in the company’s B2C business despite growing investments is also expected to weigh on the company’s “2025 earnings growth algorithm,” which they added after downgrading Expedia from Buy to Hold.
Expedia’s third-quarter bookings and adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, marginally exceeded expectations, but revenue came in slightly lower as third-quarter B2C revenue rose 140 basis points decreased on an annual basis.
Direct marketing as a percentage of gross bookings, meanwhile, “continued to decline as investment in Vrbo, HCOM and international markets grew,” the analysts said.
While Expedia analysts expect modest improvement in bookings, revenue and adjusted EBITDA growth, these estimates are not without risk given “moderate underlying B2C bookings and revenue growth, tougher comparisons for Vrbo in the second half of 2025 and limited visibility on the total marketing effort.”
Looking ahead to the fourth quarter, Expedia reported mixed expectations, with bookings and revenue slightly higher, while adjusted EBITDA slightly missed consensus estimates.
But with Expedia’s stock trading at “16x our 25 GAAP EPS, EXPE’s discount to BKNG [Booking Holdings Inc (NASDAQ:) ] above the average range, and the EXPE is trading at the top of its two-year trading range, we believe the risk/reward is balanced,” the analysts said as they raised the stock price to $192 per share from $150.
