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Expedia (EXPE) Hits 52-Week High on Impressive '17 Guidance

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Share price of Expedia Inc.EXPE rallied to a new 52-week high of $152.83, eventually closing a tad bit lower at $152.00 on Jun 22.

Currently, the company has a Zacks Rank #3 (Hold). Notably, the stock has a market cap of $22.94 billion.

Key Factors

The rally in the stock can be attributed to Expedia's positive guidance and improving loss figure. Management expects EBITDA growth rate including the ramp-up in cloud spending for full-year 2017 to be in the range of 10% to 15%. Excluding cloud expenses, it is expected to be in the range of 14% to 19%.

Additionally, management trimmed the capital expenditure (CapEx) forecast a bit. It expects CapEx excluding cost related to its headquarters project to be down year over year. Depreciation expense is expected to rise in the mid-20% range. However, the rate of increase will decelerate from the first quarter through the end of the year.

Expedia's narrower-than-expected first quarter loss and 15% year-on-year revenue growth are also positives. The company's impressive first-quarter results backed the share price momentum.

However, we note that the company has underperformed the Zacks Electronics Commerce Market on a year-to-date basis. While the industry gained 42.9%, the stock returned 34.8% over the same time frame.

Moreover, trivago TRVG , Egencia and HomeAway grew 62.5%, 11.8% and 30.3%, respectively on a year-over-year basis in the first quarter. Though the revenue growth trend looks promising, cloud spending, estimated at $110 million for 2017, remains a concern.

Expedia, Inc. Revenue (TTM)

Expedia, Inc. Revenue (TTM) | Expedia, Inc. Quote

Estimate Revisions

The Zacks Consensus Estimate for fiscal 2017 remained unchanged at $4.18 over the last 30 days. For fiscal 2018, the consensus estimate remained unchanged at $5.69 over the same time period.

Stocks to Consider

Better-ranked stocks in the broader computer-software market include Applied Optoelectronics, Inc. AAOI and Applied Materials, Inc. AMAT , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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