Street Fight: JPMorgan says sell Trivago as Mizuho initiates at Buy

In a research note on online travel, JPMorgan analyst Doug Anmuth downgraded Trivago (TRVG) to Underweight as he thinks hotel metasearch will remain challenged. Meanwhile, his peer at Mizuho started coverage of the stock with a Buy rating, arguing that the fundamentals of metasearch "remain strong" from a consumer standpoint given Trivago's transparency and easy-to-use interface for price comparison. SELL TRIVAGO: This morning, JPMorgan's Anmuth downgraded Trivago to Underweight from Neutral, with an unchanged price target of $8, saying he thinks hotel metasearch will remain challenged as large advertisers remain focused on improving performance ad spend efficiency. The analyst told investors he expects Trivago to underperform other online travel agencies and his Internet coverage universe, but acknowledged that he remains constructive on the company as a source of traffic for the OTAs. Anmuth also pointed out that he believes Trivago has limited upside from current levels, citing still early advertiser concentration and diversification efforts, "very tough" first half comparable sales with lack of visibility, and increasing competition. Additionally, Anmuth reiterated an Overweight rating on Booking Holdings (BKNG), which he believes has the best fundamentals with strong execution, and a Neutral rating on Expedia (EXPE) and TripAdvisor (TRIP), saying he needs more confidence in their ability to execute. BUY TRIVAGO: Bullish on the name, Mizuho analyst James Lee started coverage of Trivago with a Buy rating and $9 price target. The analyst told investors in a research note of his own that he believes fundamentals of metasearch "remain strong" from a consumer usage standpoint given its transparency and easy-to-use interface for price comparison. While he acknowledged that the company's search ranking change has continued to cause friction within its key advertisers and thus meaningfully disrupted revenue growth in the near-term, Lee believes these interruptions are "tactical, not structural." The analyst also initiated coverage of Booking Holdings with a Buy rating, and Expedia and TripAdvisor with a Neutral. PRICE ACTION: In morning trading, shares of Trivago have dropped 3.3% to $7.57.