) ripped 17% higher in one week, closing October on a strong
note. The advance higher followed news that the company crushed
third-quarter financial results, announcing EPS and revenues
ahead of analyst expectations.
Priceline.com reported EPS of $11.66 - beating the $11.47
estimate - and a 17% increase in sales to $1.7 billion. The
company has averaged revenue growth of 29.2% during the past five
Bigger than the actual numbers was the bullish guidance from
management, which said that European business was exceeding
expectations and the global hotel business remained quite strong.
Management expects EPS between $6.12 and $6.57 for the fourth
quarter. Analysts are expecting EPS of $6.32 from sales of $1.14
The positive financial data sent the shares back up to a key
resistance level near $640. Once lost, previous support will very
often begin to act as resistance. We can see from the blue arrows
in the chart below that this flip-flop happened to PCLN.
This chart shows the price of
shares along with an important resistance area near $640 to
a bullish position
ahead of the earnings announcement following Expedia's (
) report. Expedia is a competitor to Priceline.com. They blew
away analysts estimates days before Priceline.com's earnings
release. The positive news from the competition was a warning to
Though my price target for PCLN is 7% higher - about $680 - I'm
attentively watching the price action around $640. My expectation
is that the shares will break out above $640 and stage a 6.2%
advance. However, a failure to trade above $640 this week would
lower my expectation. It might even take me out of the trade
Recent weakness due to
the fiscal cliff
woes has taken the indices lower. This negativity likely kept
PCLN buyers at bay the past few sessions.
The indices appear ready to turn and that should mean great
things for PCLN shares. Furthermore, the PCLN chart looks eerily
similar to an Amazon.com (
six months ago.
New buyers can take a new position with a stop of $616. Once the
shares move above $640, I'll be increasing my stop loss to $626.
Equities mentioned in this article: PCLN
Positions held in companies mentioned above: