What are the markets going to do in 2024? That’s what every investor wants to know – and it’s what every stock analyst worth his salt is working to predict. Covering the year-end situation from Oppenheimer, chief investment strategist John Stoltzfus notes that after a solid earnings season, the S&P 500 index hit a new high level for the year – and is only 2% off the all-time high it hit in January of 2022.
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Corporate earnings were up 4.5% year-over-year, on year-over-year revenue gains of 1.9%; this compared favorably to the half-percent earnings decline that had been predicted. In Stoltzfus’s eyes, these earnings come hand-in-hand with the Fed’s progress in slowing inflation.
This is the background to Oppenheimer’s 2024 price target of 5,200 for the S&P 500. “The bull appears ready to run,” according to Stoltzfus, and the strategist goes on to say, “We look for 2024 to be a year of transition as markets navigate what we expect will be the Fed’s pivot from a restrictive monetary policy setting to an easier stance.”
That transition, according to Stoltzfus, should usher in a period of sustained growth and diversification in the equity market, with technology, communications services, and consumer discretionary sectors leading the charge while creating opportunities for investors across various sectors and sizes, including small- and mid-cap stocks.
The Oppenheimer stock analysts are running with this idea, choosing stocks that are ready to take advantage of solid market gains. We’ve used the TipRanks database to find out what Wall Street is thinking of one of their picks. Let’s take a closer look.
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Expedia Group (EXPE)
Expedia, a leading player in the travel industry, distinguishes itself as a technology-driven company dedicated to enhancing the travel experience for global travelers. Expedia is best known for its travel fare aggregators and its travel-centered search services, allowing users to seek and find air routes, hotel rooms, car rentals – and then to compare prices and make bookings, in locations around the world.
The company has an extensive portfolio of travel and accommodation businesses, with recognizable brands such as Hotwire.com, Travelocity, Orbitz, and Hotels.com. The parent group can leverage its platform and technology capabilities to more efficiently orchestrate the movement of its customers around the world, as they search out the ideal travel experiences, whether locally or globally.
The November rally in the stock market has been much talked about – but Expedia shares have dramatically outperformed the S&P 500 during this time. EXPE shares hit bottom on November 1, and since then have climbed 55%.
The gains really took off after the company’s November 2 financial report for 3Q23. The company beat the revenue and earnings expectations – but the real boost for the stock price came from the buyback policy announcement. The company revealed its authorization to repurchase up to $5 billion worth of common shares. This is in addition to the 17 million shares the company has repurchased so far this year, totaling $1.8 billion, and it shows management’s commitment to supporting the share price and sending capital back to investors.
The repurchase policy itself was supported by solid results that were much more bullish than the Street had expected. Revenue came in at $3.9 billion, up 8.6% year-over-year and $70 million over the estimates, while the earnings number, $5.41 per share in non-GAAP measures, was up 33% from the prior year and was 41 cents per share better than had been forecast.
We should note here that Expedia’s growth this year has come alongside a continuing boom in post-pandemic travel demand.
Analyst Jed Kelly covers this stock for Oppenheimer, and he explains how Expedia’s combination of operational efficiency and growth potential make it his ‘top pick’ in online travel.
“EXPE remains our top Online Travel pick into ‘24E on higher operational efficiencies from unifying its tech-stack/loyalty-programs and increasing B2B scale, that now require less Opex pull-forward for growth initiatives… We forecast EBITDA growing at ‘23E-‘25E CAGR of 13%, on 9% revenue growth, gross margins expanding 40bps, limited S&M leverage, and Opex growing 7%. We see upside on re-entering Europe with quicker payback periods,” Kelly opined.
After taking this upbeat stance, Kelly goes on to rate the stock as an Outperform (i.e. Buy), with a $175 price target to imply ~21% upside potential on the one-year time frame. (To watch Kelly’s track record, click here)
Overall, Expedia has earned a Moderate Buy rating from the analyst consensus, based on 23 recent reviews, which include 11 Buys, 11 Holds, and 1 Sell. (See Expedia stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
