Stifel Says Priceline Group Is Now Valued At $1,400/Share, Worth Buying

In a report published Tuesday, Stifel analyst Scott Devitt upgraded shares of

to Buy with a $1,400 price target, from a prior no rating, as the recent underperformance in shares are attributed to European macro risk. Devitt said that Priceline's valuation presents an "attractive" risk to reward scenario. The analyst added that the European macro risk is "well understood" in the current valuation and could serve as a catalyst should Europe begin to improve. Devitt also noted that Priceline's 5.0 percent 2015 estimated free cash flow yield (versus

2.2 percent and

4.1 percent) is attractive. In addition, Priceline Group "stands out even more" when comparing its 24 percent ROIC to Amazon's 9 percent and Google's 10 percent. Devitt also highlighted Priceline Group's newly initiated $3 billion share repurchase program, and consistent strong fundamentals also serve as reasons to buy shares. "Overall we commend Priceline's long-term fundamentals and free cash flow generation abilities and view recent weakness as an opportunity to gain exposure to a high quality asset," Devitt concluded. Shares traded recently at $1,162.48, up 1.1 percent on the day.