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Buy Expedia on vacation rental profit upside, Pacific Crest says

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Pacific Crest raised its rating on Expedia shares to overweight from sector weight, citing the increasing earnings potential of its vacation rental business.

"Positive HomeAway checks, multiple levers to support growth and a favorable risk/reward increase our conviction that EXPE is the best longer-term risk/reward in the space," analyst Brad Erickson wrote in a note to clients Wednesday.

"Near-term end-market trends remain mixed, but we believe the OTAs [online travel agencies] are well positioned long term to exploit the ongoing shift to online travel."

Expedia acquired vacation rental site HomeAway in December for $3.9 billion.