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Expedia Rises As Analysts Like HomeAway, Orbitz Acquisitions

Expedia ( EXPE ) stock vaulted Thursday, though the company late Wednesday posted Q4 results below expectations. Still, it performed better than the worst fears and saw bookings jump, thanks to a pair of big acquisitions. Expedia stock was up 9% in early afternoon trading on the stock market today , near 103. Expedia partner TripAdvisor ( TRIP ) saw its stock jump 16% Thursday afternoon, after that company reported a Q4 earnings beat before the open. Shares of rival Priceline ( PCLN ) were up 1.5% in afternoon trading. Expedia gave 2016 guidance for EBITDA, or earnings before interest, taxes, depreciation and amortization, which met Wall Street views. Some analysts, though, like its prospects. The growing benefits of Expedia’s recent acquisitions Orbitz and HomeAway are encouraging, RBC Capital Markets analyst Mark Mahaney said in a research note. He cited executives’ commentary on the acquisitions’ momentum and added that he trusts Expedia’s CEO to tell it like it is. “Expedia has emerged as an excellent play on the secular growth in online travel and as a strong integrator of assets,” Mahaney wrote. “Its growth rate outlook and fundamental position have become very comparable to industry leader Priceline, which we also recommend as a stock.” Jefferies analyst Brian Fitzgerald wrote in a research note that the two acquisitions added 28% to booking growth and 19% to sales growth, though he says that they will likely squeeze profit margins for the foreseeable future as Expedia integrates both firms. On the company’s earnings conference call with analysts late Wednesday, Expedia CEO Dara Khosrowshahi said that HomeAway will operate as a separate business while Orbitz is integrated into Expedia’s “technology stack.” Cowen analyst Kevin Kopelman called Q4 results “solid” and reiterated his price target of 135. Macroeconomic Fears Unfounded, For Now The slower economy is an overhang that Expedia seems to be weathering, analyst Mahaney said. “The market has assumed a boat tossed on the violent macro(economic) seas, but we see steady sailing,” Mahaney wrote. On the call, Khosrowshahi said that Expedia has thus far not experienced material macroeconomic effects. Mahaney said that he believes him. Khosrowshahi “was the most vocal and honest Internet CEO during the 2007-08 recession when it came to calling dramatic macro (he called it ‘a dog’s breakfast’ at the time),” Mahaney wrote. “So he has cred with us. And he should with you.” On the call, Khosrowshahi said that the terrorist attacks in Paris cost the company $10 million to $15 million in sales. Foreign exchange also had an impact. “One thing I will remind you as far as the core business is that foreign exchange was a really, really significant headwind last year,” Khosrowshahi said. Despite Mahaney’s positive view, he lowered his price target on Expedia stock to 180 to 160. Expedia and Priceline could consolidate their online travel lead in 2016, some analysts say. “Looking at online travel, we’re getting to the point of relative maturity; it’s no longer an early-stage category,” Guggenheim analyst Jake Fuller told IBD in December. “Thirty-eight percent of total travel is sold online.”

PC Market Slump Drags On HP Ahead Of Fiscal Q1 Report

Personal computer and printer maker HP Inc. ( HPQ ) continues to slump on diminished prospects for the PC market in 2016. HP stock on Thursday fell to its lowest level since it split from the former Hewlett-Packard on Nov. 1. HP shares were down 3% near 9 in afternoon trading on the stock market today . Earlier in the session, the stock fell as low as 8.92. HP had climbed as high as 14.82 post-split. RBC Capital Markets analyst Amit Daryanani on Thursday maintained his sector perform rating on HP stock but cut his price target to 11 from 13. He also lowered his estimates for HP’s fiscal 2016 “to reflect weaker market fundamentals.” “Recent PC-centric data points suggest to us that not just demand is soft, but there is also a continued PC inventory overhang, especially in Europe, that could negatively impact results in first half 2016,” Daryanani said in a report. “Similarly, we think both the print hardware and supplies businesses could have muted outlooks for fiscal 2016, based on Canon ( CAJ ) results/outlook and (foreign-exchange) movement.” HP is scheduled to report fiscal-first-quarter results after the market close on Feb. 24. HP executives have said the PC market will be challenging for several quarters but had expressed optimism for the second half of 2016. They had hoped Microsoft ’s ( MSFT ) Windows 10 operating system would help drive PC sales, particularly with enterprise customers, later in the year. “HP should see challenging growth dynamics through fiscal 2016 on foreign-currency translation headwinds, competitive industry pricing, and PC channel inventory issues,” Daryanani said. On Wednesday, Sterne Agee CRT analyst Rob Cihra reiterated his neutral rating on HP stock but cut his price target to 11 from 14. “While global PC demand remains weak and supply/demand negative starting calendar 2016, we actually believe HP’s PC inventories are in better shape than most, an ironic product of its weaker share in China,” Cihra said in a report. “But we still see a particularly weak start to the year.” Cihra is forecasting the PC market will unit declines of about 5% year over year in 2016, but HP could offset the industry decline through market share gains as the top-tier players continue to consolidate. The cash-cow printing business looks even weaker than PCs this year, Cihra said. On Tuesday, Pacific Crest Securities analyst Brent Bracelin maintained his sector weight rating on HP stock but lowered his estimates for HP for this year and next based on “eroding PC and printing fundamentals.” RELATED: Apple Bucks Declining PC Sales Trend HP Inc. Q4 Earnings Exposes Dark Side Of PC business .  

Twitter Video Service Must Dodge Facebook ‘Torpedo’ In 2016

Twitter ( TWTR )’s  live video broadcast app Periscope will have to dodge a big “torpedo” from rival Facebook ( FB )’s live video service, Edison Research said Thursday. And Twitter must offer more than microblogging and instant messaging services if it ever wants to significantly expand its user base and see the kind of social network growth being enjoyed by Facebook, LinkedIn ( LNKD ) and Alphabet ( GOOGL )-owned Google, wrote Edison analyst Richard Windsor in a research report following up on Twitter’s Q4 earnings late Wednesday.  “ In the last three months, Twitter has underperformed its rivals — Facebook, LinkedIn and Google — all of whom have seen the size of their user base expand,” wrote Windsor, who said Twitter currently appeals mainly to a niche group of hardcore users, including marketing reps and journalists. Beyond its microblog, Windsor said Twitter should widen its use of Periscope, the live video broadcast app it purchased in January. “This is a priority for Twitter in 2016 and it clearly intends to develop this service into a go-to place for watching live broadcasts,” he said. “If it can do this successfully, then it will be able to emerge as a competitor in the media consumption space, which is where Facebook and Google are currently seeing strong revenue growth, but Periscope needs to dodge Facebook’s live video torpedo.” Facebook’s deep pockets will be a challenge to Twitter, Windsor said. “The problem is that Facebook is competing directly in this space and has far more resources upon which to rely to ensure that Periscope fails to really gain traction,” Windsor said. Twitter Core Problems: Usability, Accessibility While Periscope is a long way from its goal of being “a major force in video broadcast,” Windsor said, “If it can become a ‘go-to’ place for live video, then we suspect that the user base would once again start growing. This would have a big effect on both revenues and the valuation of the company.” Macquarie Capital analyst Ben Schachter also says that 2016 will be a critical year for Twitter, which saw its price targets cut by at least nine analysts Thursday and its stock fall  after the company said user growth slowed in Q4, for the fourth consecutive quarter, raising concerns that usage has peaked. “We think that it needs to fix its core usability/accessibility problems first,” Schachter wrote. “We broadly agree that these are the correct focus areas for Twitter, particularly the potential for video. Having said all that, obviously execution has been an issue and we want to see some real progress. “In some ways, this should be simple: Facebook has provided a compelling model for usability and monetization, but Twitter needs to execute.” In December, Facebook opened its live video streaming service to all users in a bid to take on Twitter-owned Periscope and Meerkat. Facebook said the service is being tested in U.S. with a “small percentage of people” on iPhones, after originally releasing a live streaming feature earlier this year for celebrities. Twitter stock hit a new all-time low on Thursday, at 13.91 and was down more than 4% in midday trading in the stock market today , near 14.40. Twitter has remained below its IPO price of 26 since mid-December, sparking buyout talk. Shares of Alphabet, Facebook and LinkedIn were all down roughly 1% midday Thursday, in another rough day for the stock market overall.