Even near $1,000, Priceline is a hot ticket

Its results easily beat expectations, with even European business going strong. And the stock has room to run even higher.

By Jonathan Berr Aug 12, 2013 9:55AM

Shares of Priceline.com (PCLN) reached a high of $990 on a split adjusted basis in 1999, a level that once the dotcom bubble burst few ever thought the online travel service company, or most stocks, would reach again. Those skeptics may soon be proven wrong.


The Norwalk, Conn., company's stock closed Friday at just under $970, a nearly 4% increase, as investors voiced their approval of Priceline's better-than-expected quarterly results. They were fueled by a strong performance in Europe, thanks to Priceline's 2005 acquisition of Booking.com.

That's the same continent whose shaky economy has tripped up countless other companies. What makes Priceline even more remarkable is that it has done well in Europe for years, even when many pundits seemed sure that the region's economy was headed into a black hole. Indeed, Priceline's international bookings jumped 44%.

Its domestic business is also doing well, gaining 11.7%. The company sold 1.7 million airline tickets in the quarter, an increase of 1.8%. Hotel room nights climbed 38% to 69.4 million, and car rental days rose 46.3% to 12.5 million.


William Shatner, spokesman for Priceline.com, appears on the company's homepage on Feb. 26, 2013 (© Daniel Acker/Bloomberg via Getty Images)Net income rose in the most recent quarter to $437 million, or $8.39 per share, versus $3.52 million or $6.88 per share, a year earlier. Revenue jumped 27% to $1.68 billion versus $1.38 billion. On an adjusted basis, profit was $9.70 per share, beating analysts' expectations of $9.36.


Priceline appears to be taking market share from Expedia (EXPE), its main rival, which recently reported disappointing quarterly results. Priceline also gave bullish guidance for the current quarter, saying it now expects a profit of $15.30 to $16.30 per share. Analysts had forecast $15.86.


Although Priceline's stock price is pricey, it's still a compelling value for investors. According to Reuters, the company's price-to-earnings multiple is 30.7, below its five-year high of 38.62.


And some analysts think the stock has plenty of room to run. JPMorgan's Doug Anmuth raised his target to $1,130 from $1,040. RBC Capital Markets' Mark Mahaney hiked his forecast to $1,110 from $900 and Pacific Crest's Chad Bartley went even higher, putting an $1,187 target on Priceline, up from $1,081.


Priceline can't promise investors nothing but blue skies. Still, even with occasional turbulence, the stock is worth adding to most portfolios.


Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

Tags: EXPEPCLN
9Comments
Aug 12, 2013 10:59AM
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Priceline is just a classic middleman and at best a gimmick. Why not buy plane tickets and hotel rooms directly from the airline or hotel?
Aug 12, 2013 10:47AM
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These paid market shills never cease to amaze me with their disinformation and propaganda:

'European business going strong???'  That must be some Europe on a cornucopian dream planet someplace because the Europe on THIS planet is tipping over on its wee head and doing a face plant.

Aug 12, 2013 11:09AM
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KUDOS TO  WILLIAM SHATNER
He successfully branded and promoted a company and it came out of nowhere.

THE PAYOUT  FOR HIM IS ALSO SOMETHING ( OUT OF THIS WORLD)  BASE SALARY FOR THE COMMERCIAL SHOOTS,,,BUT A HUGE STOCK COMPENSATION
Aug 12, 2013 12:20PM
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A ticket to ride for $1000, be my guest...

 

But as far as Capt. Kirk.....Lives comfortably in Tennessee, think he still raises some SaddleBreds and has a very nice and busy daughter..

 

Yes TJ has done well, very well, for a Hammy.

Aug 12, 2013 4:54PM
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Must have been the one about Denny Crane that didn't post, when our systems went down.

Think he might have learned some legal stuff about contracts and residuals.

Aug 12, 2013 2:14PM
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Used to use Priceline regulary, however, they no longer have good deals and have found better hotel & car prices on their competitor's sites.  Bill Shatner was very good but the deals themselves suck!
Aug 12, 2013 12:25PM
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I would never have thought that Priceline stock would be as noted???
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