Expedia stock rating reiterated as Buy by BofA amid market share gains

Bank of America reiterated its Buy rating on Expedia Group, citing the online travel agency's anticipated modest global hotel room night share gains in 2025, primarily driven by its business-to-business segment. Despite Expedia's 6.5% total nights growth in H1 2025 slightly trailing the broader OTA group's 7.3%, the firm highlights a significant valuation advantage—over a 50% EV/EBITDA discount to peers—and expects improving U.S. travel trends in H2 2025, alongside a narrowing growth gap for its VRBO unit, as key factors supporting the positive outlook.

Analysis

Bank of America has reiterated its Buy rating on Expedia Group (EXPE), citing expectations for modest gains in global hotel room night share during 2025. This growth is primarily fueled by the company's business-to-business segment. While Expedia's total nights growth of 6.5% in the first half of 2025 slightly trails the broader online travel agency (OTA) sector's 7.3% expansion, the analysis highlights several positive factors. The growth gap for its VRBO unit, which has underperformed due to its U.S. concentration with a projected 3% growth versus the sector's 8%, is notably narrowing from the 11-percentage-point difference seen in 2024. Furthermore, the most compelling aspect of the bull case is valuation; Expedia trades at a significant discount of over 50% on an EV/EBITDA basis compared to its peers. The outlook is further supported by expectations for U.S. travel trends to improve relative to international markets in the second half of 2025 and early signs of a traffic recovery at Hotels.com, while strong advertising revenue provides a buffer against other revenue headwinds.

Key Decisions for Investors

• Investors could view Expedia Group as an attractive value opportunity within the OTA sector, given its substantial EV/EBITDA valuation discount of over 50% relative to peers such as Booking Holdings and Airbnb.
• It is crucial to monitor the performance of the VRBO unit and Expedia's overall total nights growth, as a continued narrowing of the growth gap against the sector average would serve as a key validation of the positive investment thesis.
• Traders should watch for an anticipated improvement in U.S. travel demand during the second half of 2025 and sustained traffic recovery at Hotels.com, as these are identified as significant near-term catalysts for the stock.
• Given Bank of America's Neutral rating on competitors Airbnb and Booking Holdings, investors seeking targeted exposure to the travel sector might consider allocating capital towards Expedia as the preferred name in this specific analysis.