Priceline.com Braced For Earnings (PCLN)

Print Email

This afternoon after the market closes, we’ll get to see earnings out of Priceline.com Inc. (NASDAQ: PCLN).  The estimates from First Call for the online travel company are $0.84 EPS on $329.3 million in revenues, and if you look below these are higher than mid-points of its guidance.  Next quarter estimates are $0.53 EPS on $342.42 million in revenues. Estimates for fiscal Dec-2008 are $4.90 EPS on $1.69 billion in revenues.

The company did offer prior guidance with its last earnings for this quarter of $0.77 to $0.85 pro forma EPS on revenues of 22% to 26% growth (translates to a range of $317+ to $327+ million).

Analysts have an average price target north of $120.00, and the most recent critical call we saw was a raise from "Hold" to "Buy" out of Citigroup last month.  It appears that options traders are braced for a move of up to $7.00 or $8.00 in either direction.  Despite a decent pullback since December highs, this chart still looks like it has not violated a longer-term uptrend.  Conversely, this stock has been using its 50-day moving average as resistance and that level is currently $107.59.  Its 200-day moving average is $85.27 and shares reached down as low as $87.00 to $90.00 during the worst part of January.  The short interest has increased in each of the last two periods and was listed as 9.81 million shares on the last report, which is more than 4.5 days worth of trading volume.

Priceline.com has greatly exceeded its earnings targets in each of the last four quarters.  As shares are up over 100% from lows we’d expect that Wall Street wants to see some solid numbers again to maintain the current prices.    In late November-2007, Priceline.com did add Jetblue to its airline roster.  At current prices, Priceline.com trades with a P/E ratio of roughly 26 for the current period and just under a forward P/E ratio of 21 for fiscal Dec-2008.

In mid-day trading, shares are down 3.5% at $101.30 and Priceline.com Inc.’s 52-week trading range is $48.75 to $120.67.

Jon C. Ogg
February 14, 2008