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Analyst Blog

Shares of Expedia.com (EXPE - Analyst Report) hit a new 52-week high of $69.76 on Dec 31, eventually closing at $69.66.

The closing share price represents a moderate one-year return of 10.1%. The average trading volume for the last three months aggregated 2,856K shares.  Expedia, which currently carries a Zacks Rank #3 (Hold), has a market cap of $9.08 billion with long-term earnings growth expectations of 13.0%.

Growth Drivers

Growth in the online travel booking industry, the ongoing successful transition of TripAdvisor to the metasearch model, product enhancements, international expansion and better-than-expected third-quarter results are some of the catalysts driving the stock.

Expedia beat the Zacks Consensus Estimate on both lines in the third quarter of fiscal 2013. Earnings soared 124.1% sequentially and 0.3% year over year to $1.26 per share. The increase in earnings was primarily due to higher gross margins and solid expense management.

Revenues rose 16.3% sequentially and 15.4% year over year to $396.5 million. The strong growth in revenues was primarily driven by healthy growth rates across most brands including Expedia, Trivago and Hotels.com.

Also, the company’s expanding customer base helped it to report gross bookings of $10.44 billion, up 3.1% sequentially and 15.2% year over year in the recently concluded quarter.

Estimate Revisions

Over the last 30 days, earnings estimates for Expedia remained unchanged for the current quarter as well as for fiscal 2013. The Zacks Consensus Estimate for fourth-quarter 2013 is pegged at 75 cents per share. Earnings estimates for 2013 and 2014 remained unchanged at $2.44 and $3.29, respectively.

Other Stocks to Consider

Other better-ranked stocks that are performing well at the current levels include Bitauto Holdings Limited (BITA - Snapshot Report), Priceline.com Inc (PCLN - Analyst Report) and RetailMeNot, Inc. (SALE - Snapshot Report). While Bitauto Holdings and RetailMeNot sport a Zacks Rank #1 (Strong Buy), Priceline.com carries a Zacks Rank #2 (Buy).

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