Priceline Is Worth $1,500 According To This Analyst

In a report published Thursday, Benchmark analyst Daniel L. Kurnos maintained a Buy rating on Priceline Group Inc PCLN, while raising the price target from $1350 to $1500. Priceline reported robust 2Q15 results, with revenue growth of 7.5 percent and bookings growth of 10.5 percent, both exceeding consensus expectations and the high-end of the company's guidance. The upside was driven by modest q/q acceleration in hotel room night growth, at 26.2 percent, up from 25.4 percent in 1Q15. Although forex headwinds had an 18 percent negative impact on international gross bookings, this is expected to moderate to 16 percent in 3Q15, making the "gross booking guidance of (1)% - 6% somewhat disappointing," analyst Daniel Kurnos said. Priceline's growth prospects are expected to be driven by international expansion prospects for OpenTable. Kurnos expects the company's cash flows to return to 20 percent y/y growth in 2016. In the report Benchmark noted, "For FY15, our gross bookings growth estimate remains essentially unchanged at $55.5 billion, reflecting the 2Q beat offset by the soft 3Q guide." "We do expect Priceline could record rebounding growth in 2016, with gross bookings up over 15% and revenue up in the high-teens. Some stabilization in the dollar and the lapping of certain investments could yield modest leverage as well," Kurnos added. Priceline's longer term growth prospects remain intact with "their superior margin profile warranting a modest premium," the report said.