The Voyage To Recovery For TripAdvisor Just Got A Good Deal Longer

Barclays remains sidelined on Tripadvisor Inc (NASDAQ: TRIP) as weak third-quarter results suggest heightened pressure on the top line from continued challenges in Instant Book (IB) transition and the shift to mobile. The shares of TripAdvisor fell heavily Wednesday on disappointing numbers.

During the quarter, hotel shopper growth grew just 3 percent, and the company guided increased marketing spend in 2017, which will weigh on margins.

Positives

On the positive side, the company said U.S. click-based and transaction revenue trends started to turn positive in September after full lapping the domestic rollout of IB.

“However, we still expect a protracted monetization recovery — as improving mobile shopper and revenue growth is offset by desktop headwinds — which we think will be further complicated by slowing organic traffic trends, leaving TRIP in a state of limbo for the time-being,” analyst Christopher Merwin wrote in a note.

Analyst's Reactions

As such, the analyst cut his price target to $57 from $67 and trimmed 2017 EBITDA estimate to $384 million from $454 million, as he expects a longer recovery for the company amid stagnating traffic growth and falling revenue per hotel shopper.

Merwin, who maintains his Equal-Weight rating on the stock, is not expecting immediate returns from the company’s initiatives as he believes “the process of changing user perception of the TripAdvisor brand is likely a multi-year in nature.”

At time of writing, shares of TripAdvisor rose 1.44 percent to $53.39; however, by time of publication, the stock was down 2.95 percent at $51.08.