Back to top

Analyst Blog

Expedia Inc. (EXPE - Analyst Report) has agreed to acquire Wotif.com Holdings Ltd. for a total cash consideration of A$703 million or $658 million based on the exchange rates as of Jul 4, 2014. The transaction is expected to be closed in the fourth quarter of 2014 subject to Wotif shareholder and other regulatory approvals.

Following the announcement, Expedia and Wotif.com Holdings shares surged 2.4% and 24.4%, respectively, in after-hours trading.

Australia-based Wotif.com is an online travel company that offers hotel rooms, airline tickets, and vacation packages in more than 69 countries. The company has a number of online travel brands in the Asia-Pacific region including, Wotif.com, lastminute.com.au, travel.com.au, Asia Web Direct, LateStays.com, GoDo.com.au and Arnold Travel Technology.

The Wotif.com acquisition will complement and enhance Expedia’s corporate travel portfolio with the addition of leading online travel brands. Additionally, the deal will help increase the company’s exposure in the Asia-Pacific region while boosting international revenues. In the last quarter, the company’s international business was down 1.8% sequentially but up 23.1% from last year.

We believe that it is important for Expedia to expand internationally, especially since China and other Asian countries being relatively under-penetrated offer good growth opportunity. Also, the strategy has worked well for its major competitor Priceline.com (PCLN - Analyst Report), which owns Booking.com in Europe and Agoda.com in Asia.

To counter the increasing competition in the online travel industry, the company has been making acquisitions and entering strategic alliances. In June, Expedia agreed to acquire a European online car rental company, Auto Escape Group, to expand into the European car rental market. In 2013, Expedia signed a strategic long-term marketing partnership with Travelocity to share the workload related to searches, bookings and promotion.

We believe these alliances and acquisitions will help Expedia grow in the future.

Expedia, one of the leading online travel companies in the world, reported first-quarter earnings of 1 cent, in line with the Zacks Consensus Estimate. However, revenues were $1.20 billion, up 4.2% sequentially and 18.6% year over year. While growth rates across most brands were healthy, Expedia, Trivago and Hotels.com were the strongest in the quarter.

Expedia has a Zacks Rank #3 (Hold). Other stocks that are performing well at the current levels include Move Inc. (MOVE - Snapshot Report) and Everyday Health, Inc. (EVDY - Snapshot Report). All these stocks sport a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%