Piper Makes Priceline.com an 'Internet Top Pick'

Piper Jaffray is adding Priceline.com (PCLN) as an 'Internet Top Pick' with a $175 target after hosting CFO Bob Mylod for two days of marketing.

Piper continues to have a very positive outlook on PCLN's European growth prospects (estimates Europe accounts for over 70% of PCLN's operating profits). Priceline is aggressively hiring personnel, expanding into new markets, and generally feels good about its unit sales. Also, they believe the European hotel market will be much more resilient than that of the U.S. market given the higher priority Europeans put on leisure travel and the lower costs of getting to destinations in Europe (i.e. discount airlines).

In Q1, Priceline experienced 50% bookings growth in the U.S., its fastest level of growth in the last several years. PCLN is clearly benefiting from its no-booking fee airline promotion which drove 83% y/y growth in airline tickets. PCLN also believes the no-booking fee offering is driving increased site traffic and increased hotel and car rental bookings – as an example, rental car booking days increased 30% y/y in 1Q vs. 14% in 2Q07. The Firm believes PCLN's recent Chop-A-Thon promotion (reduces booking fees on hotels) also has potential to drive increased traffic share for PCLN.

Sees valuation as attractive at 18x '09 PF EPS vs. expected 25% plus long term EPS growth.

Notablecalls: One to watch today.

Comments

[frdm45]

Are you kidding me? Priceline will keep on growing? Due to the combination of worldwide commodity/food inflation, declining home values, credit tightening, and of course HELLO oil prices (airline tickets are skyrocketing and airlines are currently undergoing massive, urgent downsizing), consumer discretionary income will take a big hit worldwide. People will cut back on the big trips such as going to Europe, Hawaii, Caribbean where priceline is useful. However, you don't need Priceline to plan a trip to the local Six Flags or to go camping, and these are the kind of trips the majority of people will be taking in the future. I don't think priceline is going to go away, but to continue to expect the kind of growth the company has had is to truly be optimistic. Maybe the analyst at Piper Jaffry and his buddies have huge disposable incomes and can afford glamorous trips; but that won't be the case for the average American or citizen of the industrialized world in the near future.