Expedia Stock Moves Higher Despite RBC Downgrade

The equity is down 31% year-over-year, however

Digital Content Manager
Sep 28, 2020 at 11:17 AM
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The shares of Expedia Group Inc (NASDAQ:EXPE) are up 1.2% at $94.70 at last check, despite a recent downgrade from RBC to "sector perform" from "outperform." The analyst in coverage cited an online travel survey, in which most respondents said they would not travel for leisure until 2021, and added that multi-year trends suggest Expedia has slipped in terms of best selection, ease of use and prices. In addition, the company has lost its spot as the most popular travel planner in the U.S., falling behind Alphabet (GOOGL) and Airbnb. 

On the charts, the equity has seen underwhelming growth past several months. And while shares have experienced some mild improvement since hitting an eight-year low near the $40 mark back in March, Expedia stock is now running into overhead pressure at the $95 mark, which in combination with the 20-day moving average is keeping a tight lid on the security. Longer term, EXPE continues to struggle, and is down 28% year-over-year. 

Analysts were hesitant towards the equity coming into today, with 12 of the 20 in coverage carrying a tepid "hold" rating, and the remaining eight sporting a "buy" or better. Meanwhile, the 12-month consensus target price of $99 is a premium to current levels, meaning more downgrades or price-target cuts could be in store for Expedia stock.

In the options pits, traders are leaning more optimistic, with calls popular. EXPE sports a 50-day call/put volume ratio of 3.50 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 92nd percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

Investors looking to get in on Expedia stock's next move higher may want to consider doing so with options. The security's Schaeffer's Volatility Index (SVI) of 51% sits in the relatively low 12th percentile of its annual range. In other words, option traders are pricing in relatively low volatility expectations at the moment. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) ranks at 80 out of a possible 100, implying that EXPE has tended to exceed volatility expectations in the past year -- a boon for option buyers. 



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