October 27, 2017 / 11:58 AM / 2 months ago

Expedia sinks after cut in profit outlook

Oct 27 (Reuters) - Shares of U.S. online travel services company Expedia Inc fell sharply on Friday after a bleak earnings report that fell short of analysts estimates and saw the company cut its own forecast for full year profit.

Managers told an earnings call with analysts late on Thursday that hurricanes in the United States, poor performance by its Trivago hotel-search website would reduce 2017 growth in its EBITDA measure of profit to single-digit percentages from a previous forecast of 10-15 percent.

Also weighed down by increasing investment in marketing and infrastructure, it reported third-quarter profit of $2.51 per share for the third quarter, falling short of analysts’ average estimate of $2.62 per share.

Shares of the company, which owns Expedia.com, Hotels.com, Hotwire and other travel brands, slid 15.3 percent to $124.80 in premarket trading.

“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.”

The company did not provide a detailed 2018 forecast but hinted that its earnings before interest, tax, depreciation and amortization (EBITDA) could grow in the low-teens next year, well below the expectations of some analysts.

Several analysts said the weakening of the company’s outlook might benefit competitor 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)

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