Morningstar

Sunny Outlook for Undervalued TripAdvisor

Sunny Outlook for Undervalued TripAdvisor
Securities In This Article
Tripadvisor Inc
(TRIP)

Dan Wasiolek: Most people recognize TripAdvisor for its 535 million travel reviews, but the company's platform offers so much more, with the most attractions and bookable restaurants, as well as a leading presence in accommodations. In turn, this dominant supply of travel content generates leading traffic to its platform, resulting in a powerful network effect, source of its narrow-moat rating. We portend that the company's network advantage, along with recent initiatives, will lead to a sales acceleration of high-single-digit and low-double-digit annual growth in 2017 and the next five years, respectively, from the 1% drop witnessed in 2016, as headwinds from its Instant Booking initiative abate.

We expect the company to see improving conversion on its leading network the next 10 years for several reasons. Instant Book now has supply from all the top hotels and online travel agencies, providing relevant content and attractive pricing for shoppers. Further, TripAdvisor is now displaying this content more efficiently, emphasized only to those with past interest in the feature, thereby aiding the user experience. Additionally, a new website user interface and TV campaign launched this summer should aid user awareness and satisfaction, leading to improved monetization over time.

With shares trading at a discount to our fair value estimate, we see the stock as attractive for long-term investors.

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About the Author

Dan Wasiolek

Senior Equity Analyst
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Dan Wasiolek is a senior equity analyst, AM Consumer, for Morningstar*. He covers gaming, lodging, and online travel. Names covered within the gaming industry are Wynn Resorts, Las Vegas Sands, MGM Resorts, Caesars Entertainment, Penn Entertainment, and DraftKings. In the hotel industry Dan covers Marriott, Hilton, InterContinental, Hyatt, Wyndham, Choice, and Accor. Other travel related names under his coverage are Booking Holdings, Expedia, Airbnb, Tripadvisor, Sabre, and Amadeus.

Before joining Morningstar in 2014, Wasiolek spent 16 years as an analyst and portfolio manager covering US mid- and large-cap strategies for Driehaus Capital Management. During the first half of his time at Driehaus, Dan’s responsibilities as an analyst included analyzing and recommending stocks across all sectors and industries for inclusive in the portfolios. Then in the second half of his tenure at Driehaus, Dan was responsible for stock selection and portfolio management of the US mid- and large-cap strategies, as well as co-managing in-house smaller-cap portfolios.

Wasiolek holds a bachelor’s degree in business administration from Illinois Wesleyan University and a master’s degree in business administration, with a concentration in finance, from the DePaul University Kellstadt School of Business.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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