On Wednesday, Citi updated its financial model for TripAdvisor (NASDAQ:TRIP), leading to a revised price target for the travel platform's shares. The price target has been increased to $28.00 from $23.00, while the Neutral stock rating remains unchanged.
The adjustment comes ahead of TripAdvisor's first-quarter earnings for 2024. The company is expected to show progress, particularly in its Brand TripAdvisor segment. Notable areas of improvement include its Experiences offering, which saw a year-over-year increase of 180 million experience shoppers in 2023, and the integration of its GenAI technology, which includes features such as Trips and Hotel Review Summaries.
These enhancements are believed to be contributing to higher conversion rates, repeat customer rates, and overall increased spending on the platform, despite ongoing challenges in the core branded hotels segment.
Viator, a TripAdvisor company specializing in tours and activities, is forecast to continue its high-teens growth trajectory due to sustained adoption. Although an EBITDA loss is projected for the first quarter, there is an expectation of a positive trend in profitability throughout the year. Viator is anticipated to generate positive EBITDA in 2024 and beyond.
The formation of a Special Committee by TripAdvisor to evaluate a potential transaction has been acknowledged as a positive development by Citi. However, the firm has decided to maintain a Neutral stance on the stock. The increase in the price target to $28 reflects the improving fundamentals observed by the analyst at Citi.
InvestingPro Insights
As TripAdvisor approaches its first-quarter earnings release for 2024, real-time data from InvestingPro offers some valuable insights into the company's financial health and market performance. The company's market capitalization stands at $3.49 billion, indicating its significant presence in the travel industry.
With a high gross profit margin of 91.67% over the last twelve months as of Q1 2023, TripAdvisor demonstrates its ability to maintain profitability in its operations. Moreover, the company has experienced a robust revenue growth of 19.84% during the same period, underscoring the success of its strategic initiatives, such as the integration of GenAI technology.
InvestingPro Tips highlight that TripAdvisor holds more cash than debt on its balance sheet and is expected to grow its net income this year, supporting the optimistic outlook presented by Citi. The company's stock has also shown a strong return over the last three months, with a 36.07% price total return, and analysts predict it will be profitable this year.
These factors may contribute to investor confidence as TripAdvisor continues to evolve its offerings and capitalize on market opportunities.
For readers looking to delve deeper into TripAdvisor's financials and stock performance, there are an additional 10 InvestingPro Tips available at https://www.investing.com/pro/TRIP. To enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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