Credit Suisse Sees 18% Upside Possible For Priceline

Paul Bieber of Credit Suisse maintains his Outperform rating on Priceline Group Inc PCLN and sees 18 percent potential upside in shares, which set a new 52-week high after the travel service company reported solid quarterly results on strong bookings.

Bieber raised his target price on the shares to $1,935 from $1,900 and the new target implies a potential return of 18.5 percent over the Feb. 27 closing price.

Quarter Review

Priceline reported fourth-quarter revenue/Non-GAAP EPS of $2.35 billion/$14.21 versus the Street at $2.32 billion/$12.97. The company issued first-quarter non-GAAP EPS guidance of $8.25–$8.65 versus the Street at $10.51.

“We view the 1Q EPS outlook as conservative,” Bieber wrote in a note.

The analyst noted that Priceline guided first-quarter EPS below the Street due to the impact of Easter shift, book to stay timing, and faster room night and bookings growth pressuring ad expenses.

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“The better than expected 4Q/1Q room night growth should manifest in rev. and gross profit during the summer booking season. Also, 1Q outlook assumes diminished pressure on performance marketing ROIs vs. the last few quarters, which we view as a big positive given the relatively early roll-out of Google's Expanded Text Ads,” Bieber continued.

Analyst's Adjustments

As such, the analyst upped his '17 revenue/Non-GAAP EPS estimate to $12.32 billion/$73.00 from $12.25 billion/$72.75.

At last check, shares of Priceline climbed 5.88 percent to $1,727.90 after setting a new 52-week high of $1,748.39.