Stifel's Case For $1,600 On Priceline

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Priceline PCLN shares reacted little to the company’s Q2 earnings report, but that did not stop Stifel Nicholas from putting a $1,600 price target on the stock (23.6 percent upside).

“In 2Q:14 it reported 33% y/y FX adj. growth in bookings and 29% y/y growth in hotel room nights which is particularly impressive in our view given the size and scale of the company’s operations,” wrote analyst Scott Devitt.

Related Link: Deutsche Bank Downgrades King Digital

The report also touched on the $2.6 billion acquisition of OpenTable. According to Devitt, cross selling will be very powerful, especially to bring OpenTable to Europe.

Like any stock, there are inherent risks. According to Stifel, these include the, “sustainability of key metric growth at such a large scale and the threat of new entrants such as TripAdvisor and Google into the hotel booking space.”

The $1,600 price target was derived with a DCF using 2.75 percent for perpetual growth coupled with an 11 percent discount rate.

Shares of Priceline were last trading at $1,287, down 0.54 percent.

Posted In: Analyst ColorPrice TargetInitiationAnalyst RatingsScott DevittStifel Nicholas
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