Upgrade of the Day: Expedia Inc.

Expedia Inc. (NASDAQ:EXPE) received a blessing of an upgrade today that helped lift shares up 2.8% to $7.87, however those gains were erased after-hours.

Expedia got down to a 52-week low of $6 recently, far from its $25 high, and the upgrade came today from Citigroup.  Citi upgraded Expedia Inc. to a Buy from Hold, and increased their price target from $8 to $14.  Keep in mind that is almost double where shares are trading today, can Expedia shares give a 100% return in one year?

The Citigroup analyst says, "EXPE's stock dropped 74% in 2008 and has been trading at a trough 3X-4X EV/EBITDA multiple since November. We believe the two primary reasons for this have been:

• Recessionary pressure on leisure travel spending
• Perceived market share losses vs. direct travel suppliers and Online Travel Agencies (OTAs), principally Priceline (Nasdaq: PCLN)

What has changed, however, has been the outlook for EXPE fs market share. This is due both to steps that Expedia has specifically taken - its March 11th elimination of air bookings fees - and to general industry conditions suggesting a share shift back from direct suppliers to OTAs. These two factors (the Two Factor Flywheel), along with what has been for several months an intrinsically attractive valuation, are the key factors behind Citigroup's upgrade.

SOURCE: http://www.streetinsider.com/Upgrades/Citi+Upgrades+Expedia+(EXPE)+to+Buy%3B+Attractive+Valuation/4501820.html