CE Unterburg says weakness in Expedia (EXPE ) is due to confusion over a buyout deal and hedge selling.
Analyst R. Bailey Dalton says he doesn't think weakness is justified. He says a certain percentage of people will sell when they aren't comfortable with a deal, and notes the deal is more complex that it needs to be.
On Monday USA Networks said it would acquire up to 37.5 million Expedia shares from Microsoft.
Dalton also notes arbitrageurs and hedge funds are selling Expedia after running their models using the value that Microsoft used to value its Expedia stake -- and Dalton says he's heard that the value was in the low $40s. He notes strong Q4 numbers are getting lost in the news of the deal. He maintains his buy rating and $52 target.