An under-the-radar value stock with 21% upside is one of Bank of America's top internet picks

• Bank of America says Expedia is its top internet value stock.
• The bank hiked its price objective on the stock to $221, implying 21% upside
• The analysts point to improving US travel trends and the potential for better management under its new CEO.

Bank of America just upgraded an under-the-radar value stock to one of its top internet stocks, forecasting double-digit growth ahead.

The bank hiked its price target on Expedia shares to $221, implying 21% upside from current levels amid a slew of factors setting the stage for strong returns in 2025.

The analysts, led by Justin Post, first pointed to improving US travel trends. They said spending on lodging has improved in the current quarter, while revenue per available room—a key hotel profitability metric—has surged 3.6% in the US this quarter.

Those data points are early signs of a rebound in travel among US consumers, which should only continue as the policy trajectory becomes clearer heading into the new year.

"Overall, 4Q QTD data suggest stable travel activity for the OTAs, and we think improving post-election consumer confidence could lead to a better 2025 for US domestic travel," the analysts wrote in a note on Wednesday.

The analysts also note a better setup for sales after a tough year for its family of brands. Earlier this year, Expedia's VRBO missed expectations, while Hotels.com saw bookings fall after switching up its loyalty program. Those missteps led Expedia to increase marketing spend and offer discounts, affecting revenue and margins in the third quarter.

The analysts also see potential growth from the company's new management, with CEO Ariane Gorin taking the helm in May. Since then, the company has launched new features to improve its user experience and further built out its ad capabilities, with ad revenue up 32% in the third quarter compared to a year earlier, the analysts say.

"We see room for material advertising revenue take rate benefits ahead as advertising scales," the analysts wrote, adding, "An additional $200mn in Expedia ad growth in 2025 (which could be around 25% y/y) could add $1.00 to EPS."

Expedia has surged 24% so far this year, with the majority of that growth happening since Gorin became CEO. Gorin previously led Expedia's B2B business, and has been working to rebuild the company's management team with new technology and finance chiefs.