JPMorgan Expects Priceline To Trade Down Amid Q2 Outlook

Priceline Group Inc PCLN reported strong 1Q earnings, with FXN total gross bookings growth of 26 percent y/y, gross profit growth of 21 percent y/y growth and non-GAAP EPS of $10.54. JPMorgan’s Doug Anmuth maintained an Overweight rating for the company, with a price target of $1,510.

Subdued 2Q Guidance

Although Priceline reported better-than-expected 1Q results, the guidance for 2Q16 was disappointing. The company guided to 2Q total gross bookings growth of 11-18 percent and EBITDA of $740-$795 million, lower than consensus expectations of 21 percent growth and $950 million, respectively.

“While 1Q results were solid, soft 2Q guide came as a surprise, and we look for more clarity on the drivers behind the steep deceleration in both bookings growth and EBITDA guide for 2Q. We expect PCLN shares to trade down on the 2Q outlook,” analyst Doug Anmuth wrote.

Anmuth believes that Priceline is the best positioned company in the online travel space and is poised to continue gaining share in international markets. He added, “We look for strong International bookings growth in 2016, driven by Booking.com, Agoda, KAYAK, and Rentalcars.com, along with a more stable European macro environment.”