Goldman Sachs upgraded Expedia to buy from neutral on Friday, saying the travel company's relatively cheap valuation and growth potential make it a compelling stock to own for 2019.
"While we're still generally cautious on the travel space given tight supply and healthy underlying demand, we believe TripAdvisor and Booking's recent ad spend rationalization puts Expedia in a better relative position. We believe we have seen evidence of this during recent periods where Expedia was able to drive bookings growth acceleration alongside leverage in ad spend," the bank's analyst Heath Terry wrote in note to clients Friday.
As investors flee high-growth names in favor of value plays, Terry believes Expedia can move higher given its relatively cheap valuation.
"We also believe the stock's relatively low trading multiple means it is likely to outperform in a tougher market environment for growth stocks," he wrote.
The firm raised its 12-month price target on the stock to $140 from $125, which represents a 29 percent upside from Thursday's closing price of $108.52.