Priceline.com Inc., the most valuable online travel agency, reported profit that topped analysts’ estimates as consumers flocked to the site, assuaging concerns that Europe’s financial crisis would crimp demand.
Third-quarter net income jumped 27 percent to $596.6 million, or $11.66 a share, from $469.5 million, or $9.17, a year earlier, the Norwalk, Connecticut-based company said Thursday in a statement. Analysts had predicted per-share profit of $10.90, according to data compiled by Bloomberg.
Through its acquisition of Amsterdam-based Booking.com in 2005, Priceline has beaten rivals in expanding across Europe, where online-hotel bookings were slower to emerge than in the U.S. While Priceline’s forecast in August trailed estimates because turmoil in Europe curtailed reservations in the region, the company has won business from those continuing to travel.
“Our forecast for the third quarter assumed that macroeconomic conditions will deteriorate further,” Daniel Finnegan, Priceline’s chief financial officer, said on a call with analysts. “We were pleasantly surprised to see conditions in Europe stabilize at least for the time being.”
Priceline rose 10 percent in extended Nasdaq trading after the report, to $644.55. It had increased 2.2 percent to $586.10 at the close in New York, and has gained 25 percent this year.
The company forecast fourth-quarter profit, excluding certain costs, of $6.12 to $6.57 a share, compared with $6.30, the average estimate of analysts. Adjusted earnings before interest, taxation, depreciation and amortization will be $381 million to $421 million, compared with the average analyst estimate of $401.9 million.
While conditions in Europe and the travel industry may be improving, the company is giving conservative guidance, said Michael Millman of Short Hills, New Jersey-based Millman Research Associates.
“They tend to blow it away,” Millman said. “We may be getting close to a bottom. We’re not there yet, and I don’t think anyone is going to go out on a limb and say we are.”
Hurricane Sandy, the superstorm that struck the Northeast this week, will reduce bookings and increase cancellations for New York City for many days, Priceline Chief Executive Officer Jeffery Boyd said on the conference call.
Sandy forced all three major New York airports to close. LaGuardia Airport started receiving flights today, completing the reopening of the region’s aviation hubs, after operations resumed at John F. Kennedy International Airport and Newark Liberty International Airport yesterday.
“Given that most of our business is for travel to international destinations, our best estimate at this time is that the negative effect of Hurricane Sandy will fall within the range of our guidance for the fourth quarter,” Boyd said.
Expedia Inc., Priceline’s smaller competitor, reported third-quarter earnings last week that exceeded analysts’ estimates. International revenue, which accounts for more than 40 percent of its business, climbed 22 percent in the period from a year earlier, leading to a 4.2 percent increase in Expedia’s profit to $188 million.
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