Brean Capital’s Fawne Jiang believes Ctrip.Com International Ltd (ADR)CTRP shares present a “unique opportunity” for investors, especially given that there are several levels in the business model expected to play out over the next few years.
Jiang maintains a Buy rating on the company, while raising the price target from $52 to $54.
Reasons To Buy
The analyst believes there are three specific drivers of top-line growth and margin expansion for Ctrip:
"Consolidation of the domestic travel market and continued efforts to build one-stop travel ecosystem warrants both growth as well as operating leverage ahead."
Strategic investment by the company in international resources is likely to help capture secular outbound growth, amid consumption upgrades in China.
The Skyscanner acquisition is expected to help Ctrip compete on a global scale, despite it being only a small acquisition.
“With a clear roadmap, we are confident in CTRP’s long-term growth outlook fueled by continued strengthening of its market-leading position in China and robust growth of outbound travel on top of solid margin expansion,” Jiang mentioned.
The company also reported robust Q3:16 results, with new revenue beating the consensus, driven by peak seasonality and consolidation of Qunar Cayman Islands LtdQUNR.
The non-GAAP EPS of $0.17 also beat the consensus expectations, as did the non-GAAP operating margin of 18 percent, driven by improvements in operating efficiencies.
However, Ctrip issued in-line guidance for Q4:16, with new revenue growth of 70–75 percent year-on-year.
“Specifically, the company expects to see healthy growth for major business segments across the board. On the margin side, management guided nonGAAP operating profit of RMB 400–500 million,” the analyst added.
In Friday's pre-market session, Ctrip was seen up 9.81 percent at $45.01.