2 Travel Stocks Slapped With Downgrades

Analysts see competition concerns in the travel industry

by Patrick Martin

Published on Jan 9, 2019 at 10:04 AM

Analysts weighed in on travel stocks this morning, and the results weren't pretty. Morgan Stanley downgraded both Expedia Group Inc (NASDAQ:EXPE) and Booking Holdings Inc (NASDAQ:BKNG) to "equal weight" from "overweight," while reducing their respective price targets to $125 and $2,050.

Jefferies, meanwhile, trimmed its price target on EXPE to $150, while downgrading BKNG to "hold" from "buy," and slashing its price target to $1,940 from $2,400. Both brokerage firms cited stiff competition in the travel sector and said slowing growth could lead to higher spending. 

In response, Expedia stock is down 2.7% to trade at $113.78. The security has been in a channel of lower highs and lows since late July. This has yielded five straight monthly losses, with breakout attempts thwarted by the stock's 80-day moving average. And with today's drop, EXPE is now staring at a 10% deficit year-over-year.

In the options pits, the security's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.56, which ranks in just the 7th percentile of its annual range. In other words, short-term options traders are more call-skewed than usual at the moment.

Looking at Booking Holdings, the stock is down 2.3% to trade at $1,648.50, and has now shed more than 20% in the past six months. An early November bull gap was swiftly rejected by the shares' 160-day moving average, sparking a downtrend that culminated in a two-year low of $1,606.27 on Dec. 24.

As for options traders, put buying has been more popular than usual across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The stock's 10-day put/call volume ratio of 1.14 at those exchanges is in the 74th annual percentile.

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