Barrons on the American Airline Drama, Expedia, Orbitz and Google Travel

What if Google (GOOG) gets into the online travel space?  American Airlines (AMR) is done with Orbitz (OWW) and the fear is that they may pull their flights from Expedia (EXPE) as well. 

Online travel agencies such as Orbitz or Expedia currently get flight data from a GDS, but a direct link would allow airlines to monitor in real time how well their flights were selling and allow them to keep the most profitable tickets to sell themselves.

Then again, everyone could be crushed if Google enters the online travel space with its pending acquisition of ITA Software.

What to make of it?

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Despite all the drama, Barron's believes there may be an opportunity for Expedia (EXPE) shares.

Expedia Shares Are Ready for Takeoff By MIRIAM GOTTFRIED
The online travel agency is trading at an attractive price, thanks in part to overblown fears about the competition. 

(Barrons) One might think that the a rise in the fortunes of both the travel and e-commerce industries in recent months would bode well for shares of online travel agency Expedia.

The stock is down almost 4% over the past year, depressed by fears of a push toward greater airline control over ticket sales and the spectre of a likely entrance by Google (GOOG) into the online travel arena, among other concerns.

Analysts argues that fears swirling around the stock are overblown and shouldn't seriously affect Expedia's (EXPE) bottom line. Meanwhile, Expedia trades at only 13 times forward earnings, a multiple that seriously undervalues its market leadership, robust earnings growth potential (16% growth expected in fiscal 2011) and solid management.

The stock carries a 1.1% dividend, and the company has a track record of buying back shares. Expedia, which owns Hotels.com, Hotwire.com, TripAdvisor, corporate travel site Egencia, Europe-focused hotel site Venere.com, luxury provider Classic Vacations and the Chinese eLong.com, also has considerable potential to grow its European business.

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SOURCE: http://online.barrons.com/article/SB500014240529702038225045760477735771...