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Analyst downgrades Expedia, saying stock chart is signaling trouble ahead

Key Points
  • MKM Partners downgrades Expedia to neutral from buy, citing growth worries and a struggling stock.
  • "The stock gapped down in October and has been unable to even attempt to fill that gap, an indication of weakness," wrote analyst Christopher Agnew on Thursday.
  • Shares of Expedia fell 0.3 percent Tuesday; the stock is down 17.5 percent over the past three months.
Visitors browse at the display of Expedia during the International Tourism Trade Fair in Berlin.
Fabrizio Bensch | Retuers

Stronger business travel in 2018 will likely mean higher profits for hotels, airlines and car rental providers, but online travel company Expedia won't be in on the windfall.

Growth concerns have dogged Expedia throughout the year, and MKM Partners analyst Christopher Agnew says these worries aren't likely to resolve themselves soon.

Shares of Expedia fell 0.3 percent Thursday; the stock is down 17.5 percent over the past three months.

"The stock gapped down in October and has been unable to even attempt to fill that gap, an indication of weakness," wrote Agnew on Thursday. The analyst downgraded Expedia to neutral from buy. The stock's 200-day moving average — a key metric for Wall Street technical analysts — has begun to flatten out and is at risk of moving lower.

Expedia's bookings were light in the third quarter as reported in October. Gross bookings grew by about $2.1 billion, or 11 percent year over year, and overall nights stayed through all Expedia lodgings brands increased just 16 percent year over year.

The stock "has really lost momentum," added Agnew, who has a $115 estimate on Expedia shares, which is 3.5 percent lower than Wednesday's closing price. While the outlook is gloomy, the analyst noted that Expedia's HomeAway, a direct Airbnb challenger, may benefit from strong leisure travel.