Analysts pulling back on their opinions of a stock can materially impact the share price. Tripadvisor (NASDAQ:TRIP) found that much out when Truist cut its rating, causing shares to slide in Thursday afternoon’s trading as a result.
Truist, via analyst Patrick Scholes, slashed its earnings forecasts for not only 2023 but also for 2024 and 2025 as well. The 2024 estimates took the biggest hits, and Scholes refused to offer any kind of forecast past 2025, thanks to little visibility in the sector. Scholes also cut back on his overall rating, dropping Tripadvisor from Buy to Hold, and cut the price target on Tripadvisor stock from $40 to $21.
One of Scholes’ biggest problems with Tripadvisor was that the entire travel sector is likely to be hit hard in the coming months. Travel and its accompanying costs will likely be a problem, and other names in the travel industry will also be hit similarly. Tripadvisor, for its part, is trying to entice more customers to travel by fighting back against fake reviews on the site. In 2022, Tripadvisor removed 24,521 reviews that originated with paid review companies. Tripadvisor is working to ensure its content is the best it can be and, hopefully, get more shoppers traveling despite a likely economic downturn.
However, analysts are hesitant to recommend Tripadvisor stock. Currently, analyst consensus calls it a Hold, with two Buy ratings, two Sell ratings, and seven Hold ratings. For those willing to take some risk, though, Tripadvisor stock offers 38.89% upside potential thanks to its average price target of $25.64 per share.
