In a report published Wednesday, Morgan Stanley initiated coverage on Priceline Group Inc’s (NASDAQ: PCLN) stock with an Equal-Weight rating and a $1,300 price target. The target is based on the assumption that increasing room night competition will pressure the company’s top and bottom-line. Expecting lower EPS that the Street, and “slowing growth limiting multiple expansion,” the firm awaits a better entry point.
According to the report, the Street’s figures for 2015 are 3 percent too high. Morgan Stanley projects earnings of $55.77 per share, versus the consensus of $57.71. For 2016, the research firm is modeling EPS of $70.04, versus the Street’s $68.09.
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This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
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27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
The analysts are also concerned about profitability. They see increased direct competition pressuring Priceline’s top line – “hotel commission rates are under pressure (concessions are rising) leading to lower gross profit per room night, which will decelerate to +1% in '15 and +0.5% in '16 (below +2% in '14).” Moreover, they also expect an adverse impact of competition on the bottom line.
Finally, the specialists go over margins. To put it simply: “margins haven’t risen since 2011, and industry competition is only heating up...Why would they rise now?”