Expedia Earnings: Share Pullback on Demand Moderation and CEO Transition Leaves Shares Attractive

Narrow-moat Expedia shares traveled down 13% in Feb. 8 afterhours trading, driven by weaker fourth-quarter bookings, forward commentary of moderating demand, and a CEO transition announcement. We see this pullback as an opportunity for investors that might have missed the 60% runup in shares into the earnings release from early October (versus just a 13% return for the Morningstar US Consumer Cyclical Sector Index over the same period). In fact, despite the market’s reaction, we plan to lift our $178 fair value estimate by a mid-single-digit percentage, driven by higher margins, with our 2024 revenue prognosis already factoring in moderating growth.