With strong 2Q results, JP Morgan thinks its valuation are compelling
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Recently, $TripAdvisor(TRIP.US$ , the leading online travel company, released its strong 2Q22 results. TRIP's new segment disclosure provides better visibility into TRIP's highly profitable core business and growth brands Viator & The Fork. JP Morgan believes TRIP's strong brand, leading experiences & dining brands Viator & TheFork, and valuation are compelling.
Key takeaways：
1. Q2 earnings beat expectations from businesses excluding the auction business
TRIP reported strong 2Q results, with revenues of $417M coming in 5-6% ahead of consensus expectations, and Adj. EBITDA of $109M coming in 35%+ ahead. Similar to other online travel companies, TRIP's auction business saw a softer start to July with recovery in the 2H of the month, but the rest of its business saw strong performance throughout July, which was different from other online travel companies.
2. 3Q earnings guidance lower than expected under macro pressure
(1) Reflecting on this early 3Q trend, TRIP expects 3Q revenue to be low to mid-SD percent above'19 levels, improving from 2Q that was 1% below. Adj. The EBITDA margin guide was lighter than expected, with margins expected in the low to mid-20s % range, but JP Morgan notes the high end of the guide is in line with the 26% expectation.
(2) Importantly, TRIP has not seen signs of slowdown from macro pressures, echoing other online travel companies. JP Morgan raises its 22 & 23 revenue projections by 4% & 9% and Adj. EBITDA by 8% & 7%.
3. PT: $24(rom the prior $15)
JP Morgan is establishing a December 2023 price target of $24, up from the prior $15 for Dec-22, based on ~6x our '24E Adj. EBITDA. JP Morgan believes TRIP deserves a discount vs. travel comps trading at ~10x as it believes TRIP's core platform is under-monetized while growth brands Viator & TheFork have not reached EBITDA profitability.
$TripAdvisor(TRIP.US$
$TripAdvisor(TRIP.US$
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Wise Shark OP : $TripAdvisor (TRIP.US)$
jamjammer : More to go… travelling is coming back !