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Truist Securities analyst Naved Khan reiterated a Buy rating on Tripadvisor (NASDAQ:TRIP) shares Friday, stating it is “significantly undervalued.”
Despite soaring demand, many travel stocks are yet to catch a significant bid, with investors wary due to macro headwinds such as inflation, surging fuel prices, and the Ukraine-Russia conflict.
However, Khan, who lowered the firm’s price target on the stock to $44 from $57, said that the firm’s bottom-up modeling suggests Viator alone could be worth $2.6 billion or around $18 per share, close to the company’s current overall EV.
Viator is an online experiences marketplace that provides consumers with over 345k bookable experiences in locations across the globe.
“We expect Viator to reach $2.9B in bookings (+33% Y/Y, 1% market penetration) in 2023, generating ~$520M (+40% Y/Y) in revenue and expect EBITDA to be ~breakeven as the company continues to aggressively invest into S&M to drive bookings and customer acquisition,” said Khan. “We estimate Viator’s enterprise value at ~$2.6B, which assumes ~5x sales multiple on a business which can deliver robust growth over the NT, with the potential for 25+% FCF margin longer-term.”
“With take-rates above lodging-focused OTAs ABNB (HOLD), BKNG (BUY), Viator should support 25%+ FCF margin LT, in our view.”
Tripadvisor shares are up 3.6% Friday.
