Emerging Asian Markets And AI Will Expand Global Reach

Published
19 Aug 24
Updated
14 Aug 25
AnalystConsensusTarget's Fair Value
US$222.00
6.9% undervalued intrinsic discount
14 Aug
US$206.67
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1Y
52.6%
7D
7.3%

Author's Valuation

US$222.0

6.9% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update08 Aug 25
Fair value Increased 15%

Expedia Group’s consensus price target was raised notably as its forward P/E multiple declined and revenue growth forecasts improved, supporting an increase in fair value from $193.88 to $219.00.


What's in the News


  • Expedia Group raised its 2025 fiscal year revenue growth guidance to 3%-5% from 2%-4% previously.
  • The company provided new revenue guidance for the third quarter of 2025, expecting 4%-6% growth.
  • Announced a major expansion of its B2B technology platform, including new APIs, AI-powered traveler engagement features, and advertising solutions to unlock partner growth and new revenue streams.
  • Launched new GenAI-powered discovery experiences and enhanced its AI Agent on Hotels.com, integrating with OpenAI Operator and Microsoft Copilot Actions to improve travel planning and user engagement.
  • Introduced the Reservation Management API aimed at significantly reducing hotelier operational costs, and revealed new media advertising upgrades to help partners reach travelers earlier in the planning process.

Valuation Changes


Summary of Valuation Changes for Expedia Group

  • The Consensus Analyst Price Target has significantly risen from $193.88 to $219.00.
  • The Future P/E for Expedia Group has significantly fallen from 14.91x to 12.86x.
  • The Consensus Revenue Growth forecasts for Expedia Group has risen slightly from 6.0% per annum to 6.3% per annum.

Key Takeaways

  • Geographic and technological diversification, including AI and digital channels, are fueling growth, improved retention, and expanding Expedia's market opportunity.
  • Strong B2B momentum and loyalty strategies are driving stable, high-margin revenue streams and improving long-term earnings resilience.
  • Intensifying competition, weak U.S. demand, platform challenges, and reliance on external partners threaten Expedia's growth, margins, and long-term market position.

Catalysts

About Expedia Group
    Operates as an online travel company in the United States and internationally.
What are the underlying business or industry changes driving this perspective?
  • Expansion in emerging international markets, especially Asia, is translating into double-digit booking growth, driven by rising travel demand from a growing global middle class and increased discretionary income. This ongoing geographic diversification is likely to accelerate top-line revenue growth and broaden Expedia's addressable market.
  • Ongoing shift in consumer preference toward digital and mobile channels, paired with increased adoption of AI-powered search and personalization on Expedia's platforms, is driving higher conversion rates and improved retention, which should support sustained revenue growth and margin expansion.
  • Unified global technology platform and greater automation (including AI-powered developer tools and personalized insurance products) are already producing faster feature delivery, improved customer experience, and reduced operating costs, which are expected to further expand EBITDA margins and benefit earnings over the next several years.
  • Strong momentum in B2B and advertising, underpinned by multiple quarters of double-digit revenue growth and new supply partnerships, provides Expedia with high-margin, recurring revenue streams that are less sensitive to cyclical consumer fluctuations-positively impacting overall net margin stability and earnings durability.
  • Strategic emphasis on loyalty programs and increasing share of direct/app traffic are boosting customer retention and decreasing customer acquisition costs, positioning Expedia for enhanced marketing leverage and higher long-term net margins.

Expedia Group Earnings and Revenue Growth

Expedia Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Expedia Group's revenue will grow by 6.3% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 7.9% today to 12.5% in 3 years time.
  • Analysts expect earnings to reach $2.1 billion (and earnings per share of $17.36) by about August 2028, up from $1.1 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $3.3 billion in earnings, and the most bearish expecting $1.6 billion.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.5x on those 2028 earnings, down from 23.3x today. This future PE is lower than the current PE for the US Hospitality industry at 22.8x.
  • Analysts expect the number of shares outstanding to decline by 4.97% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 9.09%, as per the Simply Wall St company report.

Expedia Group Future Earnings Per Share Growth

Expedia Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Persistent softness and uncertainty in the U.S. travel market, especially among lower-end consumers, may continue to pressure Expedia's largest and most profitable segment, potentially limiting revenue growth and margin expansion in its core B2C business.
  • Heightened dependence on supplier-driven promotions and persistent price sensitivity in the U.S. could compress take rates, undermine pricing power, and ultimately weigh on net margins and earnings quality over time.
  • Ongoing challenges and lagging recovery in major consumer brands like Vrbo and Hotels.com due to prior platform migrations-and the admission that "results are not yet showing as much as we would like in the consumer business"-raise the risk of prolonged underperformance or market share loss, affecting top-line growth and profitability.
  • Increasing competition and the proliferation of alternative travel platforms, including direct supplier initiatives and AI-enabled metasearch or social channels, could intensify margin pressure, dilute traffic acquisition, and erode Expedia's negotiating leverage-negatively impacting long-term revenue and EBITDA.
  • Reliance on external partners for traffic acquisition (including Google, AI search partners, and social channels), in conjunction with evolving consumer search behaviors, exposes Expedia to shifts in referral costs and algorithms, potentially causing volatility in customer acquisition costs and impairing marketing leverage and net margins over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of $222.0 for Expedia Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $290.0, and the most bearish reporting a price target of just $168.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $16.8 billion, earnings will come to $2.1 billion, and it would be trading on a PE ratio of 14.5x, assuming you use a discount rate of 9.1%.
  • Given the current share price of $209.72, the analyst price target of $222.0 is 5.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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