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In a report published Friday, Morgan Stanley analyst Brian Nowak upgraded shares of Expedia Inc (NASDAQ: EXPE ) to Equal-Weight from Underweight with a price target raised to $92 from a previous $75 as volume and share gains accelerated which offset higher advertising spending. Nowak noted that it was a surprise that Expedias global room night growth accelerated to 32 percent organically across all of its major brands. The acceleration came at a time when the company increased its advertising spend as total sales and marketing (including spend on Trivago) rose 500 basis points year-over-year a percentage of core OTA (online travel agency) revenue. Expedias ad spending, couponing, loyalty programs, lower net commissions and efforts to grow supply are driving faster unit growth, as Expedias global room nights grew 1,370 basis points faster than our Priceline Group first quarter estimated growth, Nowak wrote. Even if Priceline grows 1,300 basis points faster than we expect, this would still be the first time Expedia has ever outpaced Priceline in the nine year history of our models. Nowak said that Expedia is taking a larger share of the competitive leisure room night market, even against stiff competition such as Priceline. As such, the analyst noted, Priceline will find growth more difficult and may actually result in more competitive long-term pricing within the online travel agency space. Shares of Expedia surged to new 52-week highs of $102.69 on Friday and were trading higher by more than 8 percent on the day. Latest Ratings for EXPE May 2015 RBC Capital Initiates Coverage on Sector Perform Outperform May 2015 Morgan Stanley Upgrades Underweight Equal-weight Feb 2015 Morgan Stanley Initiates Coverage on Underweight View More Analyst Ratings for EXPE View the Latest Analyst Ratings See more from Benzinga Does Google Skew Search Results At The Expense Of Rivals? © 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. View comments
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