NEW YORK (AP) - Expedia Inc. shares dropped on Thursday after a JPMorgan analyst downgraded its stock to a “Neutral” rating from “Overweight,” citing an increased pricing wars between the online travel company and its rivals.
JPMorgan analyst Imran Khan also lowered the company’s price target to $9 from $12.
Expedia shares fell 56 cents, or 6.9 percent, to $7.60 in afternoon trading. The stock has traded between $6 and $25.50 during the past 52 weeks.
Last week, Expedia announced that it would cancel booking fees on its flights as part of a promotion that extends through May 31. The company was following in the footsteps of Priceline, which removed its air booking fees nearly two years ago.
On Tuesday, privately held Travelocity, a subsidiary of Sabre Holdings Corp., followed suit _ also dropping booking fees through May 31 as part of a larger promotion.
Khan predicted that Expedia will extend the no-booking fees policy permanently.
“We believe the recent decision to waive air booking fees will not result in significant offsetting market share gains,” Khan said. “Unlike when Priceline cut its booking fees and made massive market share gains, no-booking-fee air tickets have become somewhat the industry norm today.”
Stifel Nicolaus & Co. analyst George Askew said Travelocity’s new deal “levels the playing field” with Priceline and Expedia. It also puts additional pressure on Orbitz Worldwide Inc., which still collects booking fees.
The analyst said he doesn’t “believe there are any near-term winners in a potential price war among the online travel companies.”
Askew maintained “Hold” ratings on Priceline, Expedia and Orbitz.