Merrill Lynch analyst Justin Post maintained a "neutral" view on the online travel industry and said Sabre Holdings' Travelocity has the best U.S. net revenue outlook in the group.

"We believe the online travel group is attractively valued," wrote the analyst in a recent research note. However, "momentum investors returning to the Internet may prefer higher growth opportunities in other large-cap Internet names."

Post is forecasting 16% U.S. online agency bookings growth and 30% international online agency bookings growth in 2006. He estimates that industry penetration levels still have room for growth, as total online bookings represented only 30% of U.S. travel bookings in 2005 and less than 10% of bookings in Europe.

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