Priceline Group Inc. Is A Momentum Stock Left Behind
Many of the high-flying momentum stocks have gone into orbit as of late, but one issue has not joined the party: Priceline Group Inc (NASDAQ: PCLN).
The issue is actually quite a distance from its all-time high made back in March ($1,378.96) and is much closer to its June low ($1,183.00). Priceline has shed $100.00 since peaking on August 11 at $1,329.90.
Rally Off Earnings Fades Quickly
Interestingly, the recent high occurred the same day the company released its Q2 earnings. Priceline posted a solid beat on EPS ($12.51 versus $12.04 estimate), but came up shy on revenue ($2.1 billion versus $2.15 billion estimate).
This marked the eighth quarter in a row it has beat the Street, but its margin of the beat was among the smallest over the same time period. In a wild trading session, it rallied from $1,274.55 to $1,329.90, before ending the session at $1,309.28.
That day marks the last time Priceline closed above $1,300.00; it is poised to post it lowest close since August 11 if it closes under $1,234.40.
At time of publication, the issue traded at $1,223.10, down about one percent.
Many traders and investors look closely at the trading action of an issue following its earnings release. They can use this information to determine whether the Street misinterpreted the report and determine how the post-earnings move will occur.
In the case of Priceline, the good news was not good enough and the post-earnings move has been strongly to the downside. Priceline seems poised to test its June low, despite the market rallying to new all-time highs and many of the momentum stocks doing the same.
Another negative for the issue is the weakness in Thursday's session. Since Priceline derives a good portion of its profits from Europe, the recent move by the ECB to increase stimulus could have provided a boost to the issue. Instead, it declined from the open and continued to make lows in the session as the market rallied.
Wall Street analysts have been quiet on the issue since its latest earnings announcement. Of the six analysts that have commented on the issue, five of have maintained their current ratings of either Buy or Outperform.
Stifel, who evidently was impressed by its latest results, initiated coverage on August 13 with a Buy and a Street-high price target of $1,600.00.
S&P Capital viewed the company as wildly overvalued, while its Street-low price target stands at $1,125.00.
As Priceline attempts to find support in Thursday's session, traders may be waiting for the psychological level of $1,200.00 for support or even its June 13 low ($1,183.00) to begin nibbling at the former darling of Wall Street momentum sector.
If waiting to purchase the issue on strength, a series of closes over $1,250.00 could be enough to attract the attention of the momentum players once again.
Latest Ratings for PCLN
|Jan 2017||Citigroup||Initiates Coverage On||Buy|
|Jan 2017||Needham||Initiates Coverage On||Buy|
|Dec 2016||CLSA||Initiates Coverage On||Buy|
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