TripAdvisor Shares Poised for Rebound with 50% Upside Potential

TripAdvisor's shares plummeted 35% after a disappointing earnings report, but Goldman Sachs sees a potential 50% upside due to oversold conditions. The investment bank reiterated its Buy rating and set a $27 price target, citing the company's strong market position and earnings fundamentals.

Aqsa Younas Rana
New Update
TripAdvisor Shares Poised for Rebound with 50% Upside Potential

TripAdvisor Shares Poised for Rebound with 50% Upside Potential

Large TripAdvisor Inc. (NASDAQ: TRIP) shares, with a Relative Strength Index (RSI) of 16, may be primed for a significant bounce back after a sharp decline, according to Goldman Sachs. The investment bank sees a potential upside of over 50% for the online travel company's stock, despite a recent dismal earnings report that missed analyst expectations.

Why this matters: The rebound of TripAdvisor shares could have a ripple effect on the entire online travel industry, influencing consumer confidence and spending habits. Moreover, the company's recovery could also impact the broader economy, as the travel sector is a significant contributor to GDP.

TripAdvisor reported earnings per share (EPS) of $0.21 for the quarter, topping the consensus estimate of $0.07 by $0.14. The company had revenue of $390 million, compared to analysts' expectations of $372.93 million. However, the lack of progress on a potential sale of the business led to initial investor disappointment, sending shares plummeting 35% in recent days.

Despite the sharp decline, Goldman Sachs reiterated its Buy rating on TripAdvisor shares, setting a fresh price target of $27. This represents a potential upside of over 50% from the current share price of around $18. The stock's RSI reading of 16 also suggests heavily oversold conditions, indicating a potential rebound on the horizon.

Several other analysts have also revised their target prices for TripAdvisor following the earnings report. Barclays cut its target price from $20 to $15, maintaining an underweight rating. Truist Financial increased its target from $18 to $28 with a hold rating. UBS Group dropped its target from $27 to $20, keeping a neutral rating.

TripAdvisor's stock performance has been mixed, with a 50-day simple moving average of $26.47 and a 200-day average of $22.45. The company has a market cap of $2.51 billion, a P/E ratio of 301.67, a P/E/G ratio of 1.62, and a beta of 1.56. Institutional investors hold a significant 98.99% of TripAdvisor shares, signaling strong market trust in the company.

As one of the largest online travel research companies worldwide, TripAdvisor provides a platform for users to share reviews, ratings, and opinions on hotels, destinations, attractions, and restaurants. The company operates in three segments: Brand TripAdvisor, Viator, and TheFork.

With an RSI of 16 indicating heavily oversold conditions and a potential upside of over 50% according to Goldman Sachs, TripAdvisor shares may be poised for a significant rebound. The company's strong market position, impressive earnings fundamentals, and backing from institutional investors make it a compelling opportunity for investors looking to capitalize on the online travel industry's recovery and growth.