Priceline Remains One Of The Best Internet Large Caps

Priceline Group Inc PCLN is trading higher by more than 5 percent Friday, within striking distance of the stock's 52-week high of $1,476.52.

Priceline's stock reacted to Thursday's earnings report in which the company earned $13.90 per share in the second quarter on revenue of $2.56 billion. Wall Street analysts were expecting the company to earn $12.69 per share on revenue of $2.58 billion.

Related Link: Priceline Spikes On EPS Beat

Mark Mahaney of RBC Capital Markets reiterated an Outperform rating with an unchanged $1,600 price target. The analyst noted the company benefited from continued strength in its various brands, a diversified global business and overall "strong execution" event at a time of macro uncertainties.

"Priceline remains one of the best 'Net Large Caps - both fundamentally and stock wise - and screens extremely well against our 5M Framework - excellent Management team, deep competitive Moats, highly profitable business Model, a very large Market opportunity, and a reasonable Multiple (18X '17 P/E)," Mahaney wrote. "We see shares grinding higher from here, though not gapping up."

Mahaney also offered six key takeaways from Priceline's earnings report.

• Organic growth trends, including a 21 percent year-over-year bookings, remain "robust."
• Management's outlook for the third quarter implies acceleration in room night growth, gross profit and gross bookings.
• Management's third quarter guidance suggests the potential for "less worse" margin trends.
• Priceline oversaw a "sizeable" amount of stock repurchases in the second quarter and strong free cash flow generation.
• Priceline "materially outpaced" peers in room night growth and bookings.
• A search for a new CEO is still on and its current interim CEO Jeff Boyd will remain in charge until at least year-end.

Finally, the analyst's Outperform rating is based on "material new growth opportunities" in markets (such as China) that it has been investing in for years. After all, the company accounts for around 10 percent of hotel partner room night sales which indicates it "still has a long runway" ahead.