Priceline Earnings Preview: Second Quarter 2009

Priceline [[PCLN]] is scheduled to report their second quarter 2009 results before the market opens on Monday, August 10. Based on our analysis, we at EarningsPreviews.com are expecting PCLN to report better than expected results that exceed Wall Street’s consensus expectations.

 

Analyst Expectations

We are forecasting revenues of $575.0 million and EPS of $1.79. This would represent an 11% increase in revenues from last year’s $514.0 million in the same period. The current analyst consensus estimates calls for revenues of $573.0 million and EPS of $1.76. On May 11, the company provided second quarter guidance of $1.65 – $1.75 EPS.

 

Priceline continues to gain market share despite weakness in the global economy. Based on Compete data, Priceline’s traffic grew 31% in the second quarter. Meanwhile, industry leader Expedia [[EXPE]] gained only 14%, which was still much better than Orbitz’s [[OWW]] 5% decline. Last week, Expedia delivered earnings results that topped Wall Street’s estimates as flight and hotel bookings increased 10% from the first quarter. Based on the current trends, we anticipate Priceline to also deliver results that top analyst consensus expectations.

 

Given the uncertain economic conditions, Priceline has not provided guidance beyond the second quarter. However, Wall Street is anticipating full year 2009 revenue growth of 11% which we would expect Priceline to be able to exceed. In fact, we anticipate that analysts will increase their second half numbers following PCLN”s second quarter results.

 

Stock Performance

Since the beginning of the year, Priceline’s shares have gained an incredible 80%. In 2008, Priceline’s shares fell 36%, and performed relatively inline with the 34% decline in the Dow Jones industrial average.

 

Valuation

Shares are now trading at 17x consensus 2010 EPS estimates. This is a discount to the relative valuations of their peer group. Despite the phenomenal run that Priceline has had this year, the stock still trades at an attractive valuation compared to its peers in the internet sector.

 

Recommendation: Buy with a $150 price target.

 

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