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4 Takeaways From Priceline's Q1

4 Takeaways From Priceline's Q1

Following the release of first-quarter results by Priceline Group Inc (NASDAQ: PCLN), JPMorgan stated its four key takeaways from the results.

Analysts Doug Anmuth, Dae Lee, Cory Carpenter, Lina Rudashevski and Neeraj Kookada termed Priceline's first-quarter results as solid, with room nights and FXN gross booking both growing 27 percent year-over-year, including tougher Leap Day comps.

The analysts, however, believe the second-quarter guidance at the high end, implying a further deceleration to 21 percent room night and 20 percent FXN gross bookings growth, is light. The analysts think the guidance reflects Priceline's typical conservatism.

Continue To Expect Deleverage In Performance Marketing Spend

JPMorgan continues to expect deleverage in performance marketing spend. However, the firm thinks Priceline is benefiting from better conversion, scale, and new marketing channels, as advertising efficiency continued to exceed management forecast.

Management reiterated its expectation for first half margin pressure from performance marketing to be less than what it saw in the second half of 2016, the firm noted.

Growth in Vacation Rental Properties

While noting that instantly bookable vacation rental properties grew 51 percent year-over-year, analysts said Priceline continues to effectively compete with other vacation services through scaled, instantly bookable properties.

Long-Time Executive Finnegan Retiring

JPMorgan noted that Dan Finnegan, who is into his 14th year at the company, is retiring, although he will remain as CFO until a smooth transition is complete. As a pointer towards how long it would take for a new CFO to be identified, the firm said Priceline's recently completed CEO search lasted about eight months.

Analyst Actions

JPMorgan reiterated its Overweight rating on shares of Priceline and said the company remains its favorite idea in the online travel space.

The firm raised its year-end 2017 price target to $2,125 from $1,940, based on 25 times its 2018 GAAP earnings per share estimate of $84.48.

At the time of writing, shares of Priceline were down 4.84 percent at $1,818.61.

Latest Ratings for PCLN

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

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Posted-In: Doug Anmuth JPMorganAnalyst Color Price Target Travel Analyst Ratings General Best of Benzinga

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