Tags: Priceline | European | crisis | PCLN

Priceline Tries to Look Past European Crisis

By    |   Tuesday, 14 February 2012 08:26 AM

Online travel agent Priceline (PCLN) is trying to look past the European debt crisis, forecasting that new markets and solid hotel bookings will make it the portal of choice for travelers regardless of the headlines.

Business has been growing up to now, although the company has said the pace will cool a bit. Third-quarter gross travel bookings for the company, defined as the total dollar value of all travel services purchased by consumers inclusive of all taxes and fees, hit $6.3 billion, up 56.2 percent compared to a year ago.

Profit, meanwhile, came to $469 million, compared with $223 million a year ago in that quarter. Demand overseas, especially where Internet penetration is increasing, joined with strong hotel bookings to fuel growth, the company said.

Greek drama

Priceline management points out that it can't sustain such growth rates forever, especially with Europe mired in uncertainty. Its fourth quarter profit forecast is below Wall Street expectations of $5.05 per diluted share.

"The company noted that its guidance is based on current operating trends and that growing economic uncertainty, including concerns relating to potential sovereign defaults by Greece and other European states, may subject operating results to greater variability in the future," Priceline.com says in an earnings statement.

Despite ongoing uncertainty, Standard & Poor's upped Priceline.com's outlook to positive in 2011, pointing out that the company will turn in strong results due to its leadership position.

"The outlook revision to positive is based on our reassessment of its competition position," says Standard & Poor's credit analyst Andy Liu.

"Priceline.com has been gaining market share for several years, mainly from the strength of its hotel reservation offering in Europe, and we expect that to continue for some time as it penetrates developing markets and the Americas."

Earlier in 2012, Credit Suisse gave the company an outperform rating.
UBS reiterated a neutral recommendation on the stock in late 2011, while Wedbush initiated coverage at outperform. Barclays Capital, meanwhile, initiated coverage at overweight.

The company will release fourth quarter results on Feb. 27.

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Tuesday, 14 February 2012 08:26 AM
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