Priceline Soars After Results Beat Estimates, Positive Analyst Commentary

Shares of Priceline (PCLN), a provider of online travel, reservation and search services, are soaring after the company’s fourth quarter results surpassed analysts’ consensus estimates. Priceline also received positive commentary from several analysts.

WHAT’S NEW: Before the market open today, Priceline reported Q4 adjusted earnings per share of $12.63 and revenue of $2.0B, easily topping analysts’ consensus estimates of $11.80 and $1.96B, respectively. Gross travel bookings were $12B in Q4, an increase of 13% over a year ago, or approximately 24% on a constant currency basis, and the company said Q4 adjusted EBITDA increased 11% to $790M for Q4.

GUIDANCE: Priceline forecast first quarter EPS of $9.00-$9.60 and revenue up 9%-16% from the prior year, compared to analysts’ consensus estimates of of $9.61 and $2.07B, respectively. The company said it expects a year-over-year increase in room nights booked of approximately 20%-27% and an increase in total gross travel bookings of approximately 12%-19%, or approximately 18%-25% on a constant currency basis.

EXECUTIVE COMMENTARY: Priceline President and Chief Executive Officer Darren Huston said the company’s brands were starting the new year with “strong momentum.” On the company’s Q4 earnings conference call, management noted that the macro travel environment was “generally healthy,” and that $3B in stock buybacks had been authorized. Following the earnings report, Huston said in an interview with The Wall Street Journal that “oil prices are finally translating” to lower travel costs, adding that “it’s helpful, certainly in the short term.”

STREET RESEARCH: Following the Q4 report, research firm Cowen said it is obvious from Priceline’s results that the company is still seeing strength despite the broader slowdown of travel trends. Cowen reiterated its Outperform rating and $1,540 price target on Priceline shares. Piper Jaffray analyst Michael Olson viewed Priceline’s Q4 results as “solid” and said the company’s Q1 outlook is positive relative to sentiment. The buy-side had been bracing for a Q1 bookings guide-down based on weaker European travel data and the Paris attacks, but Priceline’s outlook calls for growth of 12%-19%, Olson told investors. He believes the company is seeing continued strength despite slowing travel trends and reiterated an Overweight rating on the name with a $1,540 price target.