CTRPCtrip.com International, Ltd. (ADR) (NASDAQ:CTRP) reported second-quarter results, with earnings and revenue beating consensus expectations. The Chinese travel giant generated revenue of $664 million, outpacing internal guidance of $655 million, growing 63% YoY and beating consensus estimate by $0.5 million. The company posted EPS loss of $0.17, compared to consensus estimate of $0.19.

With that, Oppenheimer analyst Jed Kelly says it worth remaining bullish on the prospects of CTRP. The analyst reiterated an Outperform rating on the stock, with a $55 price target.

Kelly is impressive with the margin trajectory at CTRP. In fact, he says that the company is transitioning to a margin story. For 2Q, CTRP reported non-GAAP operating margins that exceeded the consensus by 240bps. Despite a bit of pressure on organic hotel revenue growth, CTRP still managed to post consolidated operating margin growth of 1,600bps YoY.

Kelly notes that the kind of operating margin growth that CTRP posted in 2Q is indicative of the company’s strong competitive position.

Organic hotel revenue growth in the quarter was in the mid-20%, suggesting a growth deceleration. “We will monitor hotel revenue, and are modeling a higher mix from lower-end markets, which carry better commissions, but higher couponing,” Kelly stated

In addition, Kelly said he sees CTRP’s operating margin expanding to about 1,500bps in just two years, adding that such growth should lift the stock.

The other issue that Kelly addressed in his updated note on CTRP was 3Q guidance, which he said signals that margins will expand about 1,000bps sequentially.