THE SPARK: Analyst Michael Purcell has a "Buy" rating on TripAdvisor stock, and raised his target on the online travel review service company to $50 per share from $44. He said online travel media are valuable, as evidenced by Priceline.com Inc.'s agreement to buy Kayak Software Corp. for $1.8 billion and Expedia.com Inc. agreed to buy a majority stake in German hotel search site Trivago for $632 million.
TripAdvisor focuses on reviews, which makes it different from Kayak and Trivago. Those companies allow users to compare many other travel sites while looking for flights, hotels and rental cars. However Purcell said the Kayak and Trivago deals illustrate that online travel media is extremely important to online travel agencies like Priceline and Expedia.
"The size and scale of TripAdvisor's platform continues to impress," he wrote.
THE BIG PICTURE: Purcell said Liberty Interactive Corp.'s recent decision to buy more shares of TripAdvisor helps establish a price for the stock. In December Liberty paid about $300 million to take a bigger position in TripAdvisor and again became the company's majority shareholder.
Liberty Interactive bought 4.8 million shares of TripAdvisor Inc.'s common stock from Diller and The Diller-von Furstenberg Family Foundation, valuing the stock at $62.50 per share. As part of the deal, Barry Diller stepped down at TripAdvisor's chairman.
Purcell noted that Liberty sold part of its stake in TripAdvisor earlier in 2012.
The company's shares slumped over the summer as TripAdvisor's second-quarter results disappointed Wall Street, but the shares have bounced back since it reported third-quarter results in November.
SHARE ACTION: TripAdvisor shares rose $2.08, or 5 percent, to $44 in afternoon trading. The shares have traded between $24.57 and $47.81 in the last 52 weeks. The stock peaked in mid-July and declined after the company posted its quarterly results on July 24. By early November the shares had lost more than 30 percent of their value, but the stock has now recovered those losses.