11:52 AM EDT, 03/27/2026 (MT Newswires) -- Expedia's ( EXPE ) bookings growth could take a hit in the first half of the year as the Middle East conflict has dragged on for about a month, Morgan Stanley said in a note e-mailed Friday.

The Gulf region has found itself in the middle of a war initiated by the US and Israel against Iran late last month.

President Donald Trump said on Thursday that the US further delayed planned strikes on Iran's energy infrastructure, claiming in a social media post that Tehran requested the extension.

While prospects of peace talks have emerged, conflicting signals fueled doubts that an end to the four-week-long war is near. Israel said it will "escalate" its strikes in response to a series of Iranian missiles, CNN reported Friday.

Morgan Stanley said Expedia's ( EXPE ) bookings growth estimates for the first and second quarters would have been 1 percentage point higher, had it not been for the ongoing Middle East conflict. The region likely accounts for a low-single-digit percentage of the travel booking platform's business, according to the brokerage.

Expedia ( EXPE ) in February forecast its gross bookings to grow 10% to 12% in the first quarter and 6% to 8% in 2026.

The company last month posted better-than-expected fourth-quarter results and offered a strong outlook. Morgan Stanley raised its price target on Expedia's ( EXPE ) shares to $290 from $270.

"We are encouraged by (Expedia's ( EXPE )) progress, but look for tangible evidence of durably faster growth ahead to drive further revisions or re-rating," Morgan Stanley said.

Morgan Stanley sees a favorable risk-reward profile for Expedia ( EXPE ), citing expectations "for a U-shaped room night decline and recovery" amid deteriorating travel demand signals.

"Elevated levels of marketing spend will likely limit margin expansion over the near to medium term, while it's unclear whether (Expedia's ( EXPE )) focus on spending more to acquire higher-quality/loyal customers will result in stronger margins over the long term," the brokerage added.

Price: 226.70, Change: -6.14, Percent Change: -2.64