Priceline Earnings Feel the Squeeze in Europe

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Priceline Group Inc. (NASDAQ: PCLN) reported its third-quarter results Monday before the market open as $22.16 in earnings per share and $2.84 billion in revenue. Thomson Reuters had consensus estimates of $21.11 in earnings per share and $2.83 billion in revenue. In the third quarter of the previous year, it posted $17.30 in earnings per share and $2.27 billion in revenue.

The company gave guidance for the fourth quarter of $9.40 to $10.10 in earnings per share, and it expects a year-over-year increase of 11% to 18% in revenue. The consensus estimates for the fourth quarter are $10.91 in earnings per share and $1.91 billion in revenue.

Net income for the third quarter was $1.2 billion, an increase of 29% from the previous year.

Looking ahead to the fourth quarter, the company expects bookings will increase in the range of 8% to 15%, or slower than the 28% that it posted for this quarter. International bookings increased 32% in the third quarter, but the forecast for the fourth quarter expects growth to be in the range of 10% to 16%.

The third-quarter gross travel bookings for Priceline, inclusive of all taxes and fees, were $13.8 billion, a 28% increase from over a year ago.

Darren Huston, president and CEO of Priceline, said:

The Priceline Group finished the summer travel season with market leading growth and strong operating performance. Globally, our accommodation business booked 95 million room nights in the third quarter, up 27% over the same period last year. Booking.com continues to extend its lead as the world’s largest brand for booking accommodations, with over 540,000 hotels and other accommodations on the platform, up 52% over last year. Our rental car business grew rental car days by 18% over last year, an acceleration from 14% in the second quarter, led by improving results at both rentalcars.com and priceline.com.

Our brands are performing well in a very competitive marketplace and against a mixed macro-economic backdrop, particularly in Europe. We intend to continue to make the smart investments for future growth, including broadening our offerings, building our brands and providing a superior experience to our customers, pre- and post-reservation, across all devices.

Analyst calls ahead of the report: Deutsche Bank reiterated a Buy rating for Priceline on October 30. Credit Suisse reiterated an Outperform rating for Priceline on October 15 but lowered its price target to $1,550 from $1,600.

Shares of Priceline closed Monday down 0.6% at $1,198.52. Following the release of the earnings report, the initial response in the premarket was negative and shares were down about 6.5% at $1,120.00.

The consensus analyst price target is $1,483.40, and the 52-week trading range is $1017.28 to $1378.96. Priceline has a market cap near $62 billion.

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