Investors cut Priceline a break
Shares still rise Friday, even as the company worries about competition and economic uncertainty.
In a statement accompanying the earnings report, CEO Jeffrey Boyd even spoke of "economic uncertainty" and "intense" competition -- phrases that ordinarily cause investors to flee. But this time, Wall Street essentially handed Priceline a rare "Get of Jail Free" card.
Why? The company's track record has been spectacular. Its stock has been one of the best -- if not the best -- performers in the S&P 500 ($INX) in recent years. The company continues to mint money. Its earnings expectations for the current quarter are between $8.87 to $9.45 per share, and though that's below the $9.59 per share analysts had expected, it is still well ahead the $7.85 per share reported a year earlier.
As Ascendiant Capital Group analyst Edward Woo told Bloomberg News: "The guidance is just them being conservative. They had generally OK to positive earnings. I wouldn’t be too concerned, even though the company said there are additional economic headwinds."
"OK" earnings for Priceline would be considered awesome by most companies. Net income for the first quarter rose 34% to $244.3 million, or $4.76 a share, even as executives hiked online advertising spending by an astounding 45%. Revenue surged 26% to $1.3 billion.
Still, while investors may have given Priceline a pass for this quarter, it's doubtful they will do it again.
--Jonathan Berr does not own shares of a the listed stocks. Follow him on Twitter @jdberr.
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