TD Cowen upgrades Despegar to 'hold' on Prosus buyout deal

Investing.com -- TD Cowen upgraded Despegar.com Corp (NYSE:) to "hold" from "sell" after the Latin American online travel firm agreed to be acquired by Prosus (OTC:) for $19.50 per share in cash.

The deal, representing a 33% premium to Despegar's Friday close, values the company at 26 times its expected 2025 earnings.

TD Cowen noted that the valuation is high relative to peers but reflects potential synergies in cost and cross-selling.

Despegar, an online travel platform with a strong presence in Latin America, has faced headwinds recently due to macroeconomic and currency pressures in Brazil. The deal price reflects a turnaround opportunity amid slowing growth relative to industry peers, TD Cowen noted.

Expedia (NASDAQ:), which owns an 11.4% stake in Despegar, will benefit from the deal but is not expected to make a competing offer, according to TD Cowen. The company has a long-term supply partnership with Despegar, contributing $405 million in gross booking volume in 2023, or 0.4% of Expedia's total.