During today's overnight trading session, Expedia took the market by storm, rocketing to $143.65 per share despite it now being above its mean target price of $134.24. This 3.3% movement implies there may not be much more room for upwards movement for the stock -- if its analysts are to be believed. They are giving the Integrated Freight & Logistics stock on average rating of buy, with target prices ranging from 90.0 to 200.0 dollars per share.
For the greater market's outlook on the stock, we can use Expedia's short interest as a proxy. The short interest represents the proportion of the float's shares that are tied to short positions, meaning that the investor believes the stock will decline in the future. Here, the stock's short interest is 8.0% which means the outlook is split.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on Expedia is to look at the percentage of institutions that are invested in the stock. In this case, 97.1% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
In conclusion, we see mixed market sentiment regarding Expedia because of an analyst consensus of little upside potential, a buy rating, an above average percentage of its shares sold short, and a significant number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about EXPE:
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The stock has trailing 12 month earnings per share (EPS) of $5.46
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Expedia has a trailing 12 month Price to Earnings (P/E) ratio of 26.3 compared to the S&P 500 average of 15.97
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The company has a Price to Book (P/B) ratio of 12.01 in contrast to the S&P 500's average ratio of 2.95
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Expedia is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 22.96 and 4.24 respectively
