October 27, 2017 / 12:13 PM / 2 months ago

Expedia shares plunge on third-quarter results, full-year outlook

(Reuters) - Shares of Expedia Inc (EXPE.O) fell sharply on Friday after the U.S. online travel services company posted earnings that fell well short of analysts estimates and slashed its full-year profit forecast.

Company executives said on a third-quarter earnings call with analysts late on Thursday that hurricanes in the United States and underperformance by its Trivago (TRVG.O) hotel-search website would reduce growth in earnings before interest, tax, depreciation and amortization (EBITDA) to the single-digit range this year, from a previous forecast of 10 percent to 15 percent.

“We are not at all satisfied with our Q3 performance,” Expedia Chief Executive Officer Mark Okerstrom said on the quarterly results call.

Also weighed down by increasing investment in marketing and infrastructure, Expedia reported a profit of $2.51 per share, widely missing analysts’ average estimate of $2.62 per share. [L2N1N12KY]

Shares of the company, which owns Expedia.com, Hotels.com, Hotwire and other travel brands, plunged 17.3 percent to $121.81 in midday trading.

Expedia’s third-quarter performance differed sharply from other companies within the industry, as strong demand and branded marketing measures cushioned the blow of a severe Atlantic hurricane season that crippled the travel sector for several weeks.

The two largest U.S. airlines American Airlines (AAL.O) and Delta Air Lines (DAL.N) surprised Wall Street this month with earnings reports that reflected softer-than-expected impacts from the rash of powerful storms.

Both carriers said they expect their unit revenues to increase in the fourth quarter, despite lingering effects from the storms, as demand for leisure and business travel remained strong.

Hotel operator Hilton Worldwide Holdings Inc (HLT.N) on Thursday raised its full-year profit forecast for the third time this year and said business travel to its properties had improved in the months following the November 2016 U.S. presidential election.

“After recording strong second-quarter results, Expedia reversed course in the third-quarter, missing on every single metric, including a 4 percent room-night shortfall versus expectations,” Benchmark Company analyst Daniel Kurnos said.

    “It may take some time ... to regain its momentum.”

    Expedia did not provide a detailed 2018 forecast but hinted that its EBITDA could grow in the low-teens next year, well below previous expectations of some analysts.

    Some analysts said Expedia’s financial woes were endemic to the company, not the industry, and could possibly benefit rival Priceline Group Inc.

    “We believe Expedia and Trivago are facing more company-specific issues, and given Expedia’s comments around a strong macro lodging environment, we think impact to Priceline should be limited,” said JPMorgan Securities analyst Doug Anmuth.

    He previously expected Expedia’s 2018 EBITDA to grow about 20 percent.

    Reporting by Ankit Ajmera in Bengaluru; editing by Patrick Graham and Tom Brown

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