Priceline Rating Cut After Big Fall Rally

Priceline (PCLN) shares are under pressure Wednesday morning after Susquehanna Investment Group analyst Marianne Wolk cut her rating on the stock to Neutral from Positive. She says the shares have rallied significantly, “and now discount more of the positive in the story,” including a resilient Name Your Own Price business, a highly variable cost structure, a declining share count and a more favorable currency environment. She says the stock is now less compelling “given the macro challenges facing it and the rest of the [online travel agency] industry.”

Wolk notes that Priceline benefits from a weakening dollar, with about 60% of its bookings in Europe. She points out that the stock has rallied almost 50% since November 1, a period in which the dollar has deteriorated against the Euro. But she says the weaker dollar will not fully offset pressures from the global recession. She sees pressure on the company from weak hotel demand and declining travel volumes overall.

PCLN Wednesday morning was down $3.56, or 4.5%, to $75.06.