Expedia Gains After Forecasting 35%-45% Earnings Boost in 2016

  • Profit of 77 cents a share misses estimates of 96 cents
  • Still on the lookout for acquisitions after $6 billion in 2015

Expedia Inc. jumped the most in three months after forecasting earnings would grow as much as 45 percent this year as it integrates acquisitions.

The online travel booking company expects adjusted earnings before interest, taxes, depreciation and amortization to grow to $1.57 billion to $1.69 billion this year, Chief Financial Officer Mark Okerstrom said on a conference call Wednesday. That’s up from $1.2 billion in 2015. The stock rose 7.9 percent to $101.79 at 9:35 a.m. in New York Thursday.

The forecast came as part of a quarterly earnings report that otherwise missed analyst estimates. Bellevue, Washington-based Expedia reported fourth-quarter profit excluding some costs of 77 cents a share, lower than the average analyst estimate of 96 cents due to the strong dollar and costs linked to the purchase of HomeAway Inc. and Orbitz Inc. Sales were $1.70 billion, compared with estimates of $1.71 billion.

Expedia spent more than $6 billion on acquisitions in 2015, expanding its presence in the U.S. and defending against encroachment on its business from home sharing company Airbnb Inc. by buying HomeAway. Expedia is still on the look-out for acquisitions, but its focus will be more internal this year, Chief Executive Officer Dara Khosrowshahisaid.

“The team is more inwardly focused right now than looking to go out and aggressively acquire,” he said on a conference call Wednesday. “We don’t have any competitive holes and if we don’t engage in any M&A for the next two years, three years, we’d be perfectly happy.”

Expedia is facing competition from TripAdvisor Inc.’s instant booking platform, which allows users to reserve hotels without leaving the travel review website. TripAdvisor signed a deal with Expedia’s main rival, Priceline Group Inc., in October and will debut the feature worldwide in the first half of the year, the company said in a statement Thursday.

Continued growth of instant booking will have a small but insignificant affect on Expedia’s profitability Chief Financial Officer Mark Okerstrom said on a conference call to discuss earnings.

TripAdvisor Profit

TripAdvisor posted profit of 45 cents a share, well above the average analyst estimate for 33 cents. Shares of the Needham, Massachusetts-based company gained 16 percent to $63.04 in New York.

Expedia’s Trivago travel search engine had 2015 revenue of around $550 million, up 60 percent from the previous year, and results from HomeAway, Expedia’s largest acquisition, were better than expected, Khosrowshahi said. HomeAway will introduce a service fee for users in the coming months, he said.

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