Priceline Customers: Bring Back the Negotiator!
Perhaps this announcement caused the surge in Priceline shares during Wednesday trading since 94 percent of the company's customers submitted feedback saying they wanted the 80-year old actor to return.
In the news lately, Priceline was offering abnormally conservative third quarter guidance despite being a favorite pick by firms such as Bank of America, which downgraded the company from Buy to Neutral on August 8. The downgrade was a result of the company's outlook, which is considered an indicator of the online travel agency's health. Booking activity was expected to deteriorate through the first half of 2012.
Priceline reported second quarter earnings on August 7 and despite a beat on EPS estimates ($7.85 vs. $7.37 estimates) and a slight miss on revenues ($1.33 billion vs. $1.35 billion estimates), the company's third quarter guidance was reported way below analyst estimates at $11.10-$12.10/share vs. $12.79 expected.
After the earnings report, Priceline shares fell to new lows and eventually hit below $600 a share and have yet to recover. This is in contrast to a company that has beaten the midpoint of bookings since its first quarter in 2009 by an average of seven percent. Analysts at Piper Jaffray concluded that the company's third quarter guidance was conservative due to, "[international] bookings growth is being more significantly impacted by macro slowness vs. what we had expected after aggregating industry and competitive company data points throughout Q2."
Where will shares go from here? The stock reached its high point Wednesday at $574.79 and has since slumped to just above $570. Once William Shatner returns to commercials, consumers may begin to remember why Priceline was the leader in online travel bookings and feel confident in using the service once again, rather than traveling through competitors like Expedia (NASDAQ: EXPE), Orbitz (NYSE: OWW), Travelzoo (NASDAQ: TZOO) and Ctrip.com (NASDAQ: CTRP), all of which have been trending upward recently (with the exception of Orbitz, which traded down seven percent during Wednesday trading).
Yes, Priceline's second quarter earnings miss was rare, but with bookings remaining strong and the fearless Negotiator returning to the screen, the company may being to surge once again. Hopefully William Shatner doesn't sell off his shares when they bottom this time around.
At the time of this writing, Priceline shares traded up one percent to $570.42.
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