Overview
DA Davidson has reduced its price target for Expedia Group Inc. (EXPE) to $260 from $294, while retaining a Neutral rating on the shares. The firm issued the revised target after Expedia released fourth-quarter 2025 financial results that showed broad-based strength across brands and geographies but provided 2026 guidance on adjusted EBITDA margin expansion that DA Davidson indicated may not meet certain investor expectations.
Stock movement and valuation context
Expedia shares have slid 11.95% over the past week and are trading at $199.63, which the report notes is well below InvestingPro’s calculated Fair Value and could imply potential undervaluation. At the same time, InvestingPro analysis flags the stock's price-to-earnings ratio of 20.71 as elevated relative to near-term earnings growth.
Quarterly and full-year results
Expedia reported fourth-quarter 2025 results that DA Davidson described as solid, driven by performance across both consumer-facing brands and its business-to-business (B2B) operations. The company recorded a gross profit margin of 90.12% in the quarter. For the full year 2025, Expedia delivered results that reflected management's operational improvements in consumer businesses and expansion of B2B activities. Adjusted EBITDA margins rose 230 basis points year-over-year for 2025.
Management has also been actively repurchasing shares, according to InvestingPro data.
Guidance and analyst reaction
Expedia's initial outlook for 2026 calls for adjusted EBITDA margin expansion of 100 to 125 basis points. DA Davidson noted that this guidance - while positive - may be below some investors' expectations and was a factor in the lowered price target.
Other research houses weighed in as well. Bernstein SocGen Group reiterated a Market Perform rating and kept a $256 price target, pointing to growth and margin improvement in the quarter. Cantor Fitzgerald cut its target to $245.00 from $285.00, citing concerns related to AI, but retained a Neutral rating. Citizens reiterated a Market Perform rating, citing better execution on Expedia’s strategic priorities.
Business momentum and operating metrics
Expedia reported a 24% year-over-year increase in B2B revenue in 2025. All three business-to-consumer (B2C) brands posted consecutive growth. The company also reported a 9% rise in total room nights and an 11% increase in bookings year-over-year; bookings rose 10% when excluding foreign exchange effects. The report attributes 2025 margin gains to conversion improvements, expansion of the B2B footprint, and marketing efficiencies supported by improved data and analytics capabilities.
On the earnings front, Expedia posted adjusted earnings per share of $3.78 for the fourth quarter, topping the forecasted $3.25. Revenue for the quarter came in at $3.55 billion versus an anticipated $3.41 billion.
Bottom line
DA Davidson's price-target reduction to $260 reflects a recalibration of near-term expectations in light of Expedia's 2026 margin guidance, even as the company displayed meaningful margin expansion and revenue beats in 2025. Analysts remain divided but generally neutral to market perform on the shares as investors weigh continued margin progress against guidance and valuation metrics.