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Will Priceline Ever Hit $2,000?

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Will Priceline Ever Hit $2,000?

Shares of Priceline Group Inc (NASDAQ: PCLN) have surged more than 400 percent in the past five years and nearly 5,000 percent over the past decade as the company has become one of the dominate forces in online travel. However, while the S&P 500 has climbed more than 13.6 percent since Priceline hit its all-time high of $1,378.96 per share in March of 2014, Priceline’s stock has been range-bound.

In fact, it’s been more than a year since Priceline made new highs, and the stock is down more than 6.1 percent from its March 2014 highs. Has the company’s share price gotten too high, or is it simply consolidating before a push toward $2,000?

Stock Split?

In the past couple of years, Apple Inc. (NASDAQ: AAPL), Google Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) and Netflix, Inc. (NASDAQ: NFLX) have all issued stock splits at share prices much lower than Priceline’s current price of $1,258 per share. Following Apple’s stock split in 2014, some Priceline shareholders began calling for a split, as the high price creates a barrier to entry for smaller retail investors. However, the company has given no indication that it is planning for a split any time soon.

Can Priceline Get To $2,000?

The consensus on Wall Street appears to be that, if Priceline is going to get to $2,000, it won’t happen anytime soon. Despite the fact that Jefferies analyst Brian Fitzgerald names the stock his top online travel pick, his price target of $1,500 is well short of the $2,000 mark.

Piper Jaffray analyst Michael Olson is also Overweight on Priceline’s stock, but his target is only $1,375.

Morningstar has a target that is closer the $2,000 mark, assigning a fair value of $1,835 for Priceline.

Rare company

At over $1,200 per share, Priceline is in some rare company when it comes to stock price. According to Finviz, only NVR Inc (NYSE: NVR) ($1,480), Seaboard Corp (NYSE: SEB) ($3,381) and Berkshire Hathaway Inc (NYSE: BRK-A)’s A-shares ($214,250) have higher share prices than Priceline. Berkshire investors can choose the company’s much cheaper B-class shares for only $142. But have the high share prices of NVR and Seaboard weighed on their returns?

Priceline shares may have lagged the S&P 500 lately, but both NVR and Seaboard have more than doubled the 9.0 percent return of the S&P 500 during the past year.

Catalysts

For Priceline to eventually reach $2,000 per share, the company will need to continue to expand its global user base and increase its global travel booking market share. According to Morningstar analyst Dan Wasiolek, the company is in a prime position to do just that.

“We expect Priceline’s global online travel agency leadership position to expand over the next decade at a much faster rate than that of primary competitor Expedia, driven by a superior position in China, continued leadership in Europe, and expanding presence in the U.S.,” Wasiolek explained.

Analysts view increasing competition in the online travel space from the likes of Google, TripAdvisor Inc (NASDAQ: TRIP) and Expedia Inc (NASDAQ: EXPE) as the biggest threat to Priceline’s path to $2,000 per share.

Latest Ratings for PCLN

DateFirmActionFromTo
Feb 2018Deutsche BankMaintainsHoldHold
Jan 2018Wells FargoMaintainsMarket PerformMarket Perform
Dec 2017MKM PartnersDowngradesBuyNeutral

View More Analyst Ratings for PCLN
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