Newly Upgraded TripAdvisor Stock Has Room to Run

TRIP options are attractively priced at the moment

by Patrick Martin

Published on Jul 11, 2018 at 9:54 AM

TripAdvisor Inc (NASDAQ:TRIP) stock is up 2.6% to trade at $59.09 this morning, defying broad-market headwinds, after Barclays upgraded the travel name to "overweight" from "equal weight," while boosting its price target by $21 to $70 -- the highest among brokerages in coverage. The analyst at Barclays waxed optimistic on mobile traffic, monetization rates, and TRIP's revenue growth prospects.

On the charts, TripAdvisor stock has been red-hot in 2018, adding 71.5% and culminating in an annual high of $60.12 on June 19. The shares subsequently pulled back to their 30-day moving average, but are now back within striking distance of new-high territory.

The outperforming travel stock is incredibly underloved by analysts. Of the 22 brokerages covering TRIP, a shocking 21 rate it a "hold" or worse. Furthermore, TRIP's average 12-month price target of $46.04 represents a 21% discount to the stock's current perch. This indicates there is ample room aboard the bullish bandwagon, and a round of additional upgrades and price-target hikes could push TRIP shares even higher.

A continued short squeeze could also provide more tailwinds for the equity. Short interest fell by 15% in the most recent reporting period, yet the 18 million shares still sold short represent nearly 17% of TRIP's total available float. At the stock's average daily trading volume, it would take more than a week for shorts to buy back their shares. 

What's more, an unwinding of skepticism in the options pits could also be a boon for TripAdvisor. The stock's Schaeffer's put/call open interest ratio (SOIR) sits at 1.72-- in the 89th percentile of its annual range. This indicates that near-term options traders have rarely been more put-biased on TRIP in the past year.

Traders looking to speculate on the stock's near-term price action may want to do so with options, which are attractively priced at the moment. TRIP's Schaeffer's Volatility Index (SVI) is docked at 33% -- in the third annual percentile, meaning premium on short-term options contracts is relatively cheap at the moment, from a volatility perspective.

Ditch These Bank Stocks Before the Fed Rate Hike
Wall Street is pricing in a rate hike from the Fed on Sept. 26
Put Options Pop on Ascena Retail Stock Before Earnings
ASNA broke above the $2.40 ceiling this past May
Bullish Options Signal Says Garmin Has Room To Run
The GPS maker nabbed a 10-year high earlier today
From Schaeffer's Pro Traders
Weekly Options Secrets Revealed

Direct from our Schaeffer's traders, your FREE guide to winning with weekly options!


Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


How to Transform Technical Indicators
How you can transform lagging indicators into leading indicators.
Cape Fear Flooding Drops Duke Energy Stock
The utility company said a dam breached at a North Carolina power station
Dow and S&P Cruise to Record-Breaking Weeks
Tech stocks prevented the Nasdaq from exploring its own record high
How to Transform Technical Indicators
How you can transform lagging indicators into leading indicators.