In its latest analyst report, Morningstar maintains a "Buy" recommendation on Tripadvisor Incorporated (TRIP), highlighting the company’s undervalued status, strategic opportunities, and persistent headwinds. The report underscores Tripadvisor’s fair value estimate of $18.50 per share versus a recent close of $14.99, reflecting a significant upside potential. While Tripadvisor’s experiences and dining segments are thriving, the core metasearch business remains pressured by intensifying competition and digital disruption. Investors are advised to monitor activist involvement, potential asset monetization, and evolving market dynamics. As always, prudent due diligence is essential before acting on these insights.

Morningstar’s Investment Thesis and Target Levels

Clear Buy Call with Defined Upside
Morningstar’s research team assigns Tripadvisor a “Buy” rating, with a fair value estimate of $18.50 per share. The last traded price as of July 2, 2025, was $14.99, representing a price-to-fair-value ratio of 0.81. This discount signals a meaningful risk-adjusted upside for investors.

Market Capitalization and Valuation Metrics
Tripadvisor’s market capitalization stands at $2.08 billion, placing it in the small-cap value category. The firm’s valuation metrics—such as a price/earnings ratio of 25.73 and a price/sales ratio of 1.19—indicate a compelling entry point compared to sector peers.

Key Levels for Investors

Fair Value Estimate: $18.50 per share

Current Price: $14.99 per share

Upside to Fair Value: Approximately 23%

1-Star Price (Overvalued): $28.68

5-Star Price (Deep Value): $11.10

Strategic Catalysts: Activist Involvement and Monetization Potential

Activist Investor Starboard Value Enters the Scene
Shares surged 18% on news that Starboard Value, an activist investor, acquired a 9% stake. Morningstar views this as a catalyst for management to unlock value, particularly through monetizing leading segments such as Viator (experiences) and TheFork (dining).

Viator and TheFork: Hidden Value

Viator, Tripadvisor’s experiences brand, accounts for 46% of revenue and holds a leading position in a $150 billion market. Morningstar estimates Viator could be valued at 2-3 times 2024 sales, translating to $12-$17 per share.

TheFork, the dining segment, represents 10% of revenue and is also seen as a monetizable asset, potentially worth $2-$4 per share.

Potential for Strategic Transactions
Morningstar suggests that suitors such as Booking Holdings and Expedia could be interested in these assets to complete their travel offerings, further supporting the sum-of-the-parts valuation thesis.

Business Segmentation and Competitive Landscape

Revenue Mix and Segment Performance

Core Brand Tripadvisor (metasearch): 52% of 2024 revenue

Viator (experiences): 46% of 2024 revenue

TheFork (dining): 10% of 2024 revenue

Competitive Pressures
Tripadvisor’s metasearch business faces formidable competition from tech giants like Alphabet (Google), Amazon, and Meta, as well as specialized OTAs such as Booking and Expedia. The metasearch segment’s barriers to entry are low, and the threat from AI-powered search and direct traffic strategies is rising.

Growth Drivers and Risks

Experiences and Dining: Engines of Growth
Morningstar projects Viator and TheFork to deliver average annual sales growth of 9% and 10%, respectively, through 2034—well above historical US GDP and hotel industry growth rates. These segments are benefiting from low market penetration and strong network effects.

Metasearch: Structural Headwinds
The core metasearch business is expected to see flat sales growth over the next decade, as Google and other mass-market AI products erode traffic and increase marketing costs. In 2024, branded hotel segment revenue was only 75% of 2019 levels, a stark contrast to the broader hotel industry’s full recovery.

Margin and Profitability Outlook

Operating margins are forecast to average 5%-6% over the next five years, below sector leaders, reflecting the need for sustained marketing investment.

Adjusted EBITDA margin is expected to be 16.8% in 2025, with potential improvement as experiences and dining scale further.

Financial Health and Capital Allocation

Balance Sheet Strength
Tripadvisor’s balance sheet remains robust, with $1.1 billion in cash and manageable debt maturities through 2026. The company is forecast to generate approximately $800 million in cumulative free cash flow from 2025 to 2029.

Capital Allocation Strategy
Morningstar rates Tripadvisor’s capital allocation as “Standard.” The company has prudently refrained from dividends, focusing instead on growth investments and share repurchases. The acquisition of Viator and TheFork in 2014 is highlighted as a strategic masterstroke, positioning Tripadvisor as a leader in high-growth verticals.

ESG and Governance Considerations

ESG Risk Assessment
Tripadvisor’s ESG risk rating is “Medium” (27.4), with average management of manageable risks. While ESG exposure is in line with industry peers, governance remains a concern due to the historical influence of Liberty Interactive, which previously controlled 56% of voting power.

Recent Corporate Actions
The December 2024 acquisition of Liberty Tripadvisor for $435 million is seen as a positive, simplifying the corporate structure and enhancing the board’s ability to pursue value-unlocking strategies.

Actionable Takeaways for Investors

Key Levels to Watch

Buy Zone: Below $14.80 (deep value, high margin of safety)

Fair Value Target: $18.50 (Morningstar’s base case)

Overvalued Zone: Above $28.68 (1-star territory)

Strategic Monitoring Points

Track developments related to activist investor Starboard Value and any announcements regarding asset monetization or spinoffs.

Monitor the performance of Viator and TheFork, as these segments are the primary growth and value drivers.

Remain vigilant regarding competitive threats from Google, Amazon, and AI-driven travel search platforms.

Peer Comparison for Context
Tripadvisor trades at a substantial discount to its peers on both earnings and sales multiples, offering a contrarian opportunity for investors seeking exposure to the travel technology sector.

Disclaimer

Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. Market conditions and company fundamentals can change rapidly, and past performance is not indicative of future results