Priceline Saw Strong Growth, But Guidance Was 'Conservative As Usual'

Priceline Group Inc PCLN reported another quarter of strong performance, with stable take rates and robust growths across all key channels and geographies.

Jefferies’ Brian Fitzgerald reiterated a Buy rating on the company, with a price target of $1,660.

Another Strong Quarter

“Results benefited from seasonal effects, which shifted $40 million in Op Inc / EBITDA from Q2 to Q1,” Fitzgerald explained.

Revenue grew 17 percent year-on-year to $2.14 billion, ahead of the consensus, in line with the estimate and at the upper end of the guidance range.

Adjusted EBITDA was ahead of the estimate, consensus and guidance, at $676 million, while the non-GAAP EPS significantly beat the consensus and guidance.

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Although gross bookings beat the consensus, agency bookings came in marginally below the estimate.

Fitzgerald mentioned that bookings growth was driven by the 31 percent year-on-year growth in hotel room nights and 11 percent year-on-year growth in rental car days.

Conservative Guidance

“Guidance, conservative as usual, came in incrementally weaker on margins as new brand ad campaigns add extra pressure to continuing investment in technology & people and deleverage in performance advertising,” according to the Jefferies report.

The guidance was below consensus, partly due to Easter seasonality having shifted from 2Q to 1Q, while the launch on new advertising campaigns and ongoing deleveraging of performance advertising are likely to pressure margins.

“On the other hand, FX headwinds have moderated and mgmt expects minimal impact in Q2,” the report added.