Trip Advisor (TRIP) reported solid 4Q earnings with rev. 3% above our estimate, helped by strength in Display (46% y/y) and Other (53% y/y). Adj. EBITDA was 1% below consensus and 9% below our forecast largely due to higher than expected TV ad spend, which we believe was amplified in the quarter as the company sought to test and refine within the somewhat new channel. Topline FY14 guidance of mid-20’s was modestly above the street, while bottom line Adj. EBITDA guidance in the same range was in-line. We increase our DCF-derived target price to $94 (from $90).

The highlight of the quarter was commentary from the company that revenue headwinds caused by the meta-transformation had subsided. However, the 10 point y/y deceleration seen in hotel shopper growth may be uncomfortable for some. We however believe that at TRIP’s scale, better traffic monetization has the potential to carry multi-year tailwinds that more than offset the effect of natural traffic growth deceleration when exceeding 2 billion users. As we indicated in our somewhat recent initiation titled TRIP: Near-Term Headwinds but Voyage is Transformative, we believe that Meta will enable TRIP to monetize the 60% of Hotel Shoppers we estimate generate no revenue today.

For FY14 we decrease our Adj. EBITDA estimate by 1.5% to account for higher marketing expenses. Given the better than expected pace at which the meta-transformation appears to be materializing we have increased the longer-term tailwind we model by 100 to 200bps; this results in our FY14-19 total Revenue CAGR increasing to 20% vs. 19% previously.