Is Expedia Group (EXPE) Overvalued or Undervalued Amid Strong Share Price Momentum?

The investment landscape for Expedia Group (EXPE) presents a compelling paradox: while the stock has surged with robust momentum, its valuation remains a subject of intense debate. Analysts, institutional investors, and intrinsic valuation models offer divergent perspectives, creating a tension between short-term market sentiment and long-term fundamental analysis. This article examines the interplay of these forces to determine whether EXPE is a short-term overbought stock or a long-term undervalued gem.

Market Sentiment: Caution Amid Optimism

Brokerage firms have recently upgraded their price targets for EXPE, reflecting growing confidence in its financial trajectory. Argus raised its target to $340.00 (an 18.24% upside from the December 2025 closing price of $289.35), while B. Riley Securities increased its target by 20% to $360.00, maintaining a "Buy" rating. These adjustments suggest optimism about Expedia's ability to capitalize on post-pandemic travel demand and its strategic investments in AI-driven personalization according to analysis.

However, the broader analyst consensus remains cautious. As of early 2026, 38 brokerages assigned a "Hold" rating, with 24 holds, 13 buys, and 1 strong buy recommendation, yielding an average 12-month price target of $276.84. This divergence highlights market uncertainty. For instance, while HSBC and Susquehanna upgraded their targets to $272.00 and $265.00, respectively according to reports, bearish signals emerged in November 2025 due to profit-taking after a strong upward trend, causing a 5.1% single-day drop. Such volatility underscores the fragility of short-term sentiment, which can pivot rapidly based on macroeconomic cues or sector-specific risks.

DCF Valuation: A Stark Contrast

In stark contrast to the mixed analyst outlook, a discounted cash flow (DCF) analysis suggests Expedia is significantly undervalued. The model estimates an intrinsic value of $666.72 per share, implying a 55.1% undervaluation relative to its December 2025 closing price of $299.21. This discrepancy arises from the model's assumption of sustained cash flow growth, driven by Expedia's dominant position in the online travel sector and its ability to scale AI-driven efficiency.

Further support for undervaluation comes from traditional metrics. Expedia's price-to-earnings (P/E) ratio of 26.4x is below the estimated fair value of 29.4x, indicating the market is discounting its earnings potential. Additionally, the company has outperformed its peers, delivering a year-to-date return of 40.2% compared to the Retail-Wholesale sector's 6.7%. This outperformance, coupled with a 9.3% increase in the Zacks Consensus Estimate for full-year earnings, signals improving fundamentals that may not yet be fully priced in.

The Tension Between Short-Term and Long-Term Logic

The core tension lies in reconciling short-term market caution with long-term intrinsic value. Analysts' "Hold" consensus reflects concerns about near-term risks, such as macroeconomic headwinds, interest rate uncertainty, and competitive pressures from Airbnb and Booking Holdings. These factors justify a conservative approach for risk-averse investors.

Conversely, the DCF model and peer-relative performance suggest Expedia's long-term value is being underestimated. The company's strategic focus on AI, its robust balance sheet, and its ability to capture a growing share of the global travel market- projected to exceed $1.5 trillion by 2030-position it for durable growth. For investors with a multi-year horizon, the current price represents a compelling entry point, assuming management executes on its transformational initiatives.

Conclusion: A Stock at the Crossroads

Expedia Group stands at a crossroads, where short-term volatility and long-term potential collide. While market sentiment remains divided, the intrinsic valuation models and peer-relative performance strongly favor a bullish stance. Investors must weigh the risks of near-term corrections against the rewards of a stock that appears fundamentally undervalued. For those with a long-term perspective, EXPE offers a rare opportunity to participate in a high-growth sector at a price that may not yet reflect its full potential.