Markets & Finance

Legg Mason Upgrades Expedia to 'Buy'


Legg Mason upgraded Expedia (EXPE) to buy from hold.

The online travel company posted 48 cents fourth quarter earnings per share (adjusted) on a sharp revenue rise, set a stock buyback and split, and named Erik Blachford as CEO. Analyst Thomas Underwood says results were better than expected. Gross bookings were $1.3 billion, up 96% from the prior year, reflecting strength in merchant hotels, agency air, international segments, and vacation packages.

He believes Richard Barton has built an exceptionally deep management team, and thinks shareholders will not notice a material difference in the CEO transition. Underwood raised the $853.5 million 2003 revenue estimate to $881 million. He also cut the $2.46 2003 earnings per share (adjusted) estimate to $2.37, but notes the definition of adjusted earnings per share has changed; otherwise, he would be increasing his estimate by about 15 cents. Underwood set a $75 target.


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