Priceline Target Price Raised by Analysts on Strong Q3

Using a smartphone to calculate data

The target price of Priceline.comPCLN was recently raised by many investment firms based on strong third-quarter results.

To name a few, RBC Capital Markets' analyst Mark Mahaney raised his price target more than 5% to $1,850 with an outperform rating. Cowen analyst Kevin Kopelman raised his price target more than 9% to $1700. Also, UBS analyst Eric Sheridan raised his price target by 11% and Credit Suisse analyst Stephen Ju raised his price target by 2% on Priceline.

Following the third-quarter earnings release on Nov 7, Priceline share price is up by more than 6.0% to $1,570.26.

Analyst Bullish on Q3 Earnings

The analysts remain optimistic about Priceline's room night growth in the near future. They believe that the company will continue to benefit from rising Chinese travel demand, due to its partnership with China online travel provider Ctrip CTRP . The analysts expect increasing bookings to expand margin growth in the near term.

In the third quarter, Priceline revenues were $3.69 billion, up 44.4% sequentially and 18.9% from the year-ago quarter. Revenues beat the Zacks Consensus Estimate by 1.9% and were better than management's guidance of $3.55 billion at the mid-point.

Also, both agency and merchant businesses showed strong momentum. Room nights grew much faster than in the recent past. Rental cars also performed impressively. Room nights grew 6.3% sequentially and 29.4% from last year. Priceline's room night growth is attributable to its geographically diverse inventory and brand recognition that tend to balance out macro uncertainties related to any one market, as well as growing competition from local and international players.

For the upcoming fourth quarter, Priceline expects room nights booked to grow 20-25% and total gross bookings to grow 16-21% year over year (17-22% on a constant currency basis). It expects gross profit dollars to increase 13-18% (14-19% on constant currency basis), with adjusted EBITDA in a range of $755-795 billion.

Also, the analyst is optimistic about Priceline's dominance and growth prospects in the strengthening online travel agency (OTA) market. Priceline has been steadily building position in emerging international markets. The company's international business continues to do very well while the domestic business is being helped by deals, promos, prudent marketing, partnerships and acquisitions.

PRICELINE.COM Price and Consensus

PRICELINE.COM Price and Consensus | PRICELINE.COM Quote

Bottom Line is one of the leading online travel companies in the world. The secular growth trend in the online travel booking market, Priceline's strong position in international markets, growth opportunities in the domestic market, good execution, prudent marketing strategy and strong financial position are among its positives.

Moreover, Priceline belongs to an attractive industry and has a strong international presence, which is particularly a positive for its business. However, intensifying competition from Expedia, weaker ADRs and macro headwinds remain as concerns.

Currently, Priceline shares carry a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Mercadolibre, Inc. MELI , with a Zacks Rank #1, and Groupon, Inc. GRPN with a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Mercadolibre, Inc. delivered a positive earnings surprise of 23.58% in the trailing four quarters.

Groupon, Inc. delivered a positive earnings surprise of 31.07% in the trailing four quarters.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks - absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PRICELINE.COM (PCLN): Free Stock Analysis Report

MERCADOLIBRE IN (MELI): Free Stock Analysis Report

CTRIP.COM INTL (CTRP): Free Stock Analysis Report

GROUPON INC (GRPN): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.