Expedia shares gain on TripAdvisor spin-off plan

Reuters News
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Posted: Apr 08, 2011 11:38 AM

ATLANTA (Reuters) - Shares of Expedia Inc gained nearly 11 percent on Friday as analysts called the online travel agency's plan to spin off its TripAdvisor travel content business a way to unlock value.

"TripAdvisor has been the company's major growth engine for the past five quarters, during which time the advertising-supported travel media brand has achieved revenue growth greater than 28 percent," Stifel Nicolaus analyst George Askew said in a note to clients.

Stifel raised its Expedia rating to "buy" from "hold" on Friday.

The plan, disclosed after markets closed on Thursday, would separate Expedia into two publicly traded companies.

The new TripAdvisor would have operations of the current travel advisory business that include 18 popular travel brands, while Expedia Inc would continue to comprise transaction brands such as Expedia.com, Hotels.com, Hotwire and carrentals.com.

Bank of America Merrill Lynch analyst Justin Post said the move likely reflected management's impatience with the stock, which was down 10 percent on the year before the Thursday announcement, and confidence in growth opportunities for TripAdvisor despite competition from services such as Google Places.

But his note added the spin-off could expose Expedia's slow growth and leave it more vulnerable to competition.

Expedia shares were up $2.42, or 10.7 percent, at $24.82 in Nasdaq morning trading.

(Reporting by Karen Jacobs; Editing by Steve Orlofsky)