Expedia Gains 6% Despite Third Consecutive Loss

Expedia reported a third consecutive quarterly loss on Wednesday as the COVID-19 pandemic-led lockdown and social distancing measures adopted by countries across the world continues to hurt travel demand.

The online travel company posted an adjusted loss of $0.22 per share compared with adjusted EPS of $3.38 reported in the year-ago quarter. However, its bottom line fared better than analysts’ expectations of a loss of $0.92 per share sending its shares up 5.7% higher Wednesday’s extended trading session.

Expedia’s (EXPE) 3Q revenues plunged 58% to $1.5 billion but came ahead of analysts’ estimates of $1.37 billion. Gross bookings dropped 68% in 3Q, improving from the 90% plunge in 2Q.

Expedia’s CEO Peter Kern said, “Travel demand continued to be significantly impacted by the virus in the third quarter, but the increased travel in the quarter, along with continued progress on our cost initiatives, led to improved financial results. As the last several weeks have demonstrated, the travel industry and the world still face a prolonged and bumpy path to recovery, with increasing COVID-19 cases and uncertainty around vaccine and therapeutic timelines.” (See EXPE stock analysis on TipRanks)

Ahead of the earnings release, Deutsche Bank analyst Lloyd Walmsley this month lowered the stock’s price to $108 (9.6% upside potential) from $112 but reiterated a Buy rating. Walmsley expects that Expedia will be a “top performer” in the online travel space in 2021 and sees upside in the stock price in the short-term on positive vaccine news. However, the analyst believes that “a more fulsome recovery” will take a longer time.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 7 Buys and 5 Holds. The average price target of $108.58 implies upside potential of about 10.2% to current levels. Shares have declined 8.9% on a year-to-date basis.