By: Craig Bowles
Priceline.com (NASDAQ:PCLN) is slated to report 4Q 2013 earnings after the bell on Thursday, February 20. The earnings release is expected at approximately 4:00 p.m. EST, followed at 4:30 p.m. with a webcast presentation available through Priceline Investor Relations. This is, among other things, the top global online hotel reservation service, and could therefore influence direction of the index futures and other broad market gauges.
Outliers & Strategy
- Non-GAAP EPS 4Q2013: The current Street estimate is $8.27 (range $7.81 to $8.62) (Source: Yahoo! Finance). Estimates were increased by 2c during the last three months. The company guidance is in the range of $7.80 to $8.30, so analysts expect a strong report.
- Revenues for 4Q2013: Revenues are seen rising 27.3% y/y to $1.52 bln (range $1.47 bln to $1.56 bln).
- Non-GAAP EPS Guidance for 1Q2014: The current Street estimate is $7.14 (range $6.31 to $7.64).
- Revenues Guidance for 1Q2014: Revenues are seen rising 26.6% y/y to $1.65 bln (range $1.54 bln to $1.72 bln).
- Priceline insiders sold 76,000 shares over the last six months, which is nearly equal to the $1 billion stock buyback the company announced last summer.
- Priceline and Expedia (NASDAQ:EXPE) are the top two global online travel agents with similar gross-hotel bookings (US$30 bln), and results could also impact other online travel agents, such as Travelzoo (NASDAQ:TZOO), TripAdvisor (NASDAQ:TRIP) and Orbitz Worldwide (NYSE:OWW). The growth of Expedia and Priceline are threatening to make the smaller outlets irrelevant to the industry, according to some analysts.
- Competitor Expedia beat estimates, as earnings per share jumped 46% on a revenue increase of 18%, as gross bookings surged 21% and the number of hotel room nights climbed 25%. (Priceline has a larger foothold in Europe, so is more sensitive to overseas economic news.)
- Priceline shares have a 1-day average price change on earnings of 6.62%. Options are pricing in an implied move of 5.50% off earnings.
- 01/15 Evercore Partners boosted their price target to $1,350 from $1,250 and continue to rate the company at Overweight on a belief in the combination of scale and marketing efficiency, according to a post on StreetInsider.com.
- 01/13 UBS raised their price target to $1,300 from $1,220 on positive channel checks, according to a post on StreetInsider.com.
- 01/07 Morgan Stanley said Priceline.com is still the one to own despite an 87% price rise in 2013. They raised the price target to $1,320 from $1,210 and continue to have an Overweight rating, pointing to expected improvement in European hotel demand, according to a post on StreetInsider.com.
Priceline has doubled in just over one year and recently broke above $1200, which had acted as a ceiling for the latest balance area. The short-term moving averages are in the middle of the previous balance area at $1170.50. A bullish report reaction continues making new all-time highs, while a disappointment would create a false breakout with a retracement down to at least the short-term moving averages. (Chart courtesy of StockCharts.com)
Nearly all analysts have Buy ratings on Priceline.com, less than 10% have a Hold rating, and zero have the stock as a Sell. The company beat estimates by at least 23c over the last four quarters and last quarter beat by $1.15, so analysts expect an EPS of $8.27 at the high end of guidance. 4Q EPS would have to come in above $8.50, with solid revenue and guidance to surprise on the upside and more new highs. Disappointing results resulting in a false breakout would support furthering a chaos pattern since November.
DISCLAIMER: By using this report, you acknowledge that Selerity, Inc. is in no way liable for losses or gains arising out of commentary, analysis, and or data in this report. Your investment decisions and recommendations are made entirely at your discretion. Selerity does not own securities in companies that they write about, is not an investment adviser, and the content contained herein is not an endorsement to buy or sell any securities. No content published as part of this report constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.