Tripadvisor may be worth $25 a share or more in takeover - analyst

Tripadvisor (NASDAQ:TRIP) may be worth about $25 a share or more in a potential takeover after the travel company announced it formed a special committee to evaluate acquisition proposals, according to a Wells Fargo analyst. Tripadvisor jumped 11% in premarket trading.

Private equity is the most likely buyer of Tripadvisor (TRIP) and the company has a sum-of-the-parts valuation of $25 a share, Wells Fargo analyst Brian Fitzgerald wrote in a note on Tuesday.

"We think that most likely interest would come from a PE fund that likes the combination of assets in the portfolio and has a plan for maximizing their values, especially that of Viator and TheFork," Fitzgerald, who has an equal weight rating and $20 price target on TRIP, wrote.

Gregory Maffei's Liberty TripAdvisor (OTCQB:LTRPA), which owns 21% of TRIP and has 57% voting control of TRIP, also announced Monday that it's considering a transaction whereby all LTRP and TRIP shares would be purchased for cash.

"A somewhat conservative SOTP valuation on consensus 2024 estimates yields $25/share, but we note that it doesn't give full credit to Viator compared to direct competitor GetYourGuide ($2B private valuation)," Fitzgerald added.

Fitzgerald expects Tripadvisor (TRIP) may get an offer of over $25 a share from a PE buyer, though he also outlines a scenario where a financial buyer could pay $28 and "easily generate" 20% IRR in 3 years.

Cowen analyst Kevin Kopelman also sees Tripadvisor (TRIP) with a sum-of-the-parts valuation of $25 a share. He doesn't expect OTA's including Booking Holdings, (BKNG), Airbnb (ABNB), Expedia (EXPE), or Trip.com (TCOM) could be potential acquirers due to regulatory issues. Kopelman has a market perform and $25 price target on TRIP.

Tripadvisor (TRIP) is scheduled to report Q4 results on Wednesday.