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By: Brendan Gilmartin, VP Research And Content

Priceline.com (NASDAQ:PCLN) is scheduled to report 1Q 2013 earnings after the close of trading on Thursday, May 9, with a conference call to follow at 4:30 p.m. EST. Priceline shares are near all-time highs headed into the report, benefiting from stabilization in Europe, expansion in Asia, and growth in the North American market. With the shares recently hurdling back above the 700-level, the market is pricing in a solid quarter. Anything less could be seen as a major disappointment.

Outliers And Strategy

Priceline previously indicated it sees Non-GAAP EPS in the range of $4.90 to $5.30 per share for the 1Q 2013 period. The current consensus is at the high end of that range at $5.27 (high estimate on the Street is $5.50).

Priceline also indicated it expects 1Q 2013 revenue to increase 17% to 24% year over year ($1.0 bln). That would equate to about $1.17 bln to $1.24 bln. The Street estimate is $1.28 bln.

Adjusted EPS Guidance (2Q 2013): The forward outlook is critical for Priceline. The consensus is $9.58. (Yahoo Finance)

Given the recent run-up in Priceline shares, look for Non-GAAP EPS and revenues to come in toward the high end of forecasts. Also note that guidance typically drives the price action in the shares after the results are released.

Apart from the traditional financial measures, keep an eye on Gross Travel Bookings. The estimate is $9.055 bln. (Zacks)

Sympathy Plays: Expedia (NASDAQ:EXPE), Travelzoo (NASDAQ:TZOO), TripAdvisor Inc. (TRIP), And Orbitz Worldwide (NYSE:OWW).

Recent News

  • 04/15: According to a report in Barron's, Priceline shares could come under pressure in response to increasing competition. The publication also highlights increased risks associated with expansion plans into Latin America and Asia. If earnings growth were to begin decelerating, Barron's contends Priceline shares could drop 20% or more.
  • 04/11: Booking.com (Priceline's European affiliate) reported total transaction value of mobile hotel bookings tripled from $1 billion in 2011 to over $3 billion in 2012.
  • 04/02: Deutsche Bank maintained a Neutral rating on Priceline, due in part to increased competition, according to a post on StreetInsider.com. Other risks include the cost of desktop search and the threat of Google advancing its Hotel Finder product.

Technical Review

Priceline.com shares recently rallied back above the $700-level to within earshot of the all-time peak of $745.24 established on April 12. Should earnings or forward guidance disappoint, look for initial support near $720.00, with downside risk to $710.00 (nearly coinciding with the 20-Day SMA), $700.00, and $690. Conversely, there is initial resistance at the aforementioned $745-level, with plenty of upside on a strong release. (Chart courtesy of StockCharts.com)

Summary

Priceline.com shares are up more than 16.8% YTD and fetching 26.2x trailing earnings in advance of the 1Q 2013 release after the close on Thursday. Bulls are quick to argue that Priceline dominates the online travel market, particularly on the international scene with a dominant foothold in Europe via Booking.com, along with assets in Asia. The recent lift in the share price is also attributable to the underlying pickup in the global economy. Despite this favorable backdrop, however, Priceline is facing increased competition, both domestic and abroad, along with rising marketing and customer acquisition costs. With that said, the bar is set pretty high ahead of the 1Q earnings release, leaving Priceline vulnerable to even the slightest missteps.

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Source: Priceline Shares Near All-Time Highs Ahead Of Q1 Earnings On Thursday