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NEW YORK (AP) — A Jeffries analyst on Wednesday rated shares of four online travel agencies, but recommended that investors buy only one of them.
Analyst Brian Fitzgerald gave a "Hold" rating to TripAdvisor Inc., Expedia Inc. and Orbitz Worldwide Inc., saying that while each of the companies have opportunities for growth, a weak global economy and other factors will likely keep the stocks from growing much in the near future.
Priceline Inc., though, is better positioned to weather bad economic conditions, Fitzgerald said. He rated Priceline shares a "Buy," suggesting the stock could grow 24 percent over the next year. Fitzgerald pointed to the company's strong revenue growth and room to expand internationally for offering his top rating.
For TripAdvisor, the analyst thinks that the stock has strong long-term potential but might get tripped up in the near future by economic weakness, increasing competition and lack of diversity in its customers. Revenue from leading customers to Expedia represented 28 percent of its total last year, Fitzgerald said. TripAdvisor spun off from Expedia last year.
The analyst said that Orbitz is falling behind as it also faces increasing competition despite a large and growing online travel market. Relatively soft bookings and revenue growth over the last year suggested it's not currently a good buy for investors, Fitzgerald said.
And while Expedia is the biggest online travel agency in the world, Fitzgerald noted its size has also worked against it, and it's been slower to respond to changing conditions across its many brands. He says Expedia's bookings and revenue have improved with overall industry trends, but only by one-third of its biggest competitors' average growth rates.
TripAdvisor shares rose 59 cents to $35.24 in afternoon trading. Expedia added 13 cents to $52.12. Orbitz picked up a penny at $2.71, and Priceline fell $1.43 to $595.46.