Priceline Crushes Q4 Views On Hotels

Investor's Business Daily

Priceline (NASDAQ:PCLN - News) shares rose 6.5% in late trading Monday after the online travel agency reported fourth-quarter earnings and sales that easily topped Wall Street forecasts on a strong jump in global hotel reservations, especially in Asia and other new markets.

Priceline's Q1 earnings guidance also beat targets, but its sales forecast was a tad light.

The Norwalk, Conn.-based company, which trailblazed a name-your-price service, earned $5.37 a share minus special items, up 58% vs. a year ago. That beat by 32 cents the estimate of analysts polled by Thomson Reuters. In Q3, Priceline beat by 65 cents. Revenue surged 35% to $991 million. Analysts had expected $967.9 million. For the current quarter, Priceline expects to earn $3.80 to $3.90 a share, excluding special charges, on a 22% to 27% revenue gain. Analysts sees EPS of $3.72. But the 24.5% midpoint of the sales increase was less than the 25.2% that analysts had forecast. Priceline said 2011 profit soared 74% to $23.45 a share. Revenue leapt 41% to $4.36 billion. Priceline shares closed the regular session fractionally higher at 591.54 before surging to about 630 in after-hours trading. Analysts and investors appeared to shrug off the light Q1 sales view as part of Priceline’s typical conservative guidance. "We think Priceline is among the greatest companies in our universe of Internet companies based on the way they manage, communicate and plan for the future," said S&P Capital IQ analyst Scott Kessler.

Gross bookings, the dollar value of all travel services bought by consumers, surged 52% to $4.96 billion. They shot up 65.5% overseas vs. 16% in the U.S.

Hotel Reservations Boom

Global hotel room reservations soared 53%. Airline ticket bookings grew 6%. Car rental days jumped 34%.

"We are pleased with the growth of our brands in 2011," Priceline CEO Jeffery Boyd said in a conference call with analysts after the results were issued.

Priceline continues to grab market share in Europe, S&P's Kessler says. Two major sports events likely will swell its regional bookings in 2012, he says. One is the London Summer Olympics which will take place July 27 through Aug. 12. Also, the final games of the European football championships will be held in Warsaw, Poland, and Kiev, Ukraine, from June 8 to July 1.

Kessler also believes that Priceline's Booking.com hotel unit is starting to chew at Expedia's (NASDAQ:EXPE - News) U.S. market share.

"Priceline's growth story is largely intact and we still see a lot of upside," he said.

Citigroup analyst Mark Mahaney said in a Feb. 21 report that Priceline enjoyed positive U.S. Web traffic trends in Q4. Tracker ComScore says U.S. traffic to the core Priceline.com website jumped 18% vs. a year earlier between October and December. He says Priceline's international traffic also was upbeat with traffic to Booking.com across Europe up 60% vs. a year earlier.

Nomura Equity Research analyst Brian Nowak is less bullish. He said in a Jan. 26 report that a drop in European average daily rates for hotel rooms poses new risks in 2012. Nowak noted that European hotels make up 55% of Priceline's total bookings.

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