Signal Says Buy TRIP on the Dip

Analysts and short sellers are wary of TripAdvisor stock

Deputy Editor
Jan 24, 2019 at 2:59 PM
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Since their early November bull gap that resulted in a two-year high of $69.00, the shares of TripAdvisor Inc (NASDAQ:TRIP) pulled back. Recently, though, TRIP has found support in the $52-$54 area and is already 5.1% higher this year. Plus, the travel concern just retreated to a key trendline -- a signal that, if history is any indicator, could suggest TRIP stock is ready for its next leg higher. 

Specifically, the equity recently came within one standard deviation of its 200-day moving average, after a lengthy stretch above the trendline. Per Schaeffer's Senior Quantitative Analyst Rocky White, over the past couple of years, there have been three similar pullbacks. TRIP stock averaged a one-month gain of nearly 7% after those signals. From where the stock currently sits at $56.74, a similar move would put TripAdvisor back around $60.70. 

TRIP Jan 24

A round of analyst upgrades could help, should TRIP continue its recent rebound, with 15 analysts giving the security a tepid "hold" rating, and four giving it a "sell" or worse. Only two brokerage firms dub the stock a "strong buy." Plus, the consensus 12-month price target of $57.13 falls in line with current levels, leaving the door open for potential price-target hikes. 

What's more, short interest is up by 11.33% in the most recent reporting period, to 14.76 million shares, and represents a whopping 13.9% of the stock's available float. At TRIP's average daily trading volume, it would take roughly seven days for traders to buy back these pessimistic positions -- a potential tailwind for TRIP, should bears begin to jump ship.

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