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Although Expedia and Priceline.comshares have surged this year, Europe presents a big question mark for travel stock analysts.
In the short term, Jake Fuller, an analyst at Lazard Capital Markets, has seen European travel trends hold up, but he emphasized that travel is a lagging rather than a leading economic indicator.
“If indeed the weakness in Europe continues to gain steam, we’re going to see that show up in travel. It’s not going to show up in (the second quarter) — it’ll be in the back half of the year,” Fuller told CNBC’s “Squawk on the Street.”
Last month, Fuller downgraded Expedia’s stock to a “neutral” rating from a “buy,” since he thought its expectations had become too aggressive.
“All of my data is showing me their business is actually slowing down a little bit,” he said. “I think their margins are coming under pressure, but importantly not because of Europe.”
He predicted that Priceline , which has more exposure than Expedia to Europe, would have a “very strong second quarter,” and that any concern for the company is more of a third-quarter or fourth-quarter issue.
“I’m not particularly worried about Europe today, but in the back half of the year, I am,” he said.
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