Although I continue to be negative on the overall consumer discretionary sector due to higher gas prices and the expiration of a payroll tax holiday, it is hard to ignore the improving story for Priceline (PCLN). The company continues to take market share and gain favorable analyst coverage. Its commercials are quite entertaining, on the lighter side as well. The stock sports a solid valuation given its growth prospects and recent analysts' comments could power the shares higher.
Recent analyst positives on Priceline.
- JPMorgan just raised its price target on PCLN to $835 from $740 while maintaining its "Overweight" rating on the stock.
- Jefferies & Company lifted its price target to $820 a share from $780 and its analyst, Brian Fitzgerald, stated it would "easy to see the shares in the 900's."
- JG Capital reiterated its "Overweight" rating and raised its price target on the shares to $800 a share.
- Ascendiant Capital Markets initiated the shares as a "Buy" less than a month ago as well.
4 Reasons PCLN is still a good growth play at $680 a share:
- Consensus earnings estimates for both FY2013 and FY2014 have moved up nicely over the last month continuing a consistent trend over the last few months as analysts upwardly revise their view of Priceline's earnings power.
- Even given this, analysts consistently are too conservative on their estimates. The company has beat earnings estimates for twelve straight quarters. It seems the company beats consensus earnings projections by between 5% to 10% every quarter.
- The company has approximately $3B in net cash on the balance and the company has more than tripled its operating cash flow over the past three years.
- Revenues are projected to be up over 20% this year, the stock sports a five year projected PEG of 1 and PCLN sells for 15x 2014's projected earnings.
Disclosure: I am long PCLN.