June 2, 2010



| Inc. |(PCLN-NASDAQ) |1,719.84 |

Note: This report contains substantially new material. Subsequent reports will have new or revised material highlighted.

Reason for Report: 3Q17 Earnings Update

Prev. Ed.: Sep 1, 2017; 2Q17 Earnings Update

Brokers’ Recommendations: Neutral: 26.1% (6 firms); Positive: 73.9% (17 firms); Negative: 0.0%

Prev. Ed: 14, 3, 0

Brokers’ Target Price: $2,032.19 (↑$45.31 from last edition; 16 firms) Brokers’ Avg. Expected Return: 19%

Note: A flash update was done on Oct 7, 2017 (3Q17 Earnings Update)

Note: Though dated Dec 8, 2017, the data in the tables below are as of Nov 10, 2017.

Portfolio Manager Executive Summary

Inc. (PCLN) is an e-commerce company that owns numerous travel-related websites, which serve travelers worldwide. Priceline’s two product lines provide a broad array of options to value-conscious travelers and value-added services to travel suppliers. For instance, Priceline started with the “Name Your Own Price” (NYOP) or opaque system that allows consumers to bid on rental cars or hotel rooms, and searches for suppliers to fulfill the order. Operating in 98 countries, the company is benefiting from the rapidly growing global travel e-commerce market. In addition, the company, through its investment in Priceline Mortgage Company LLC, does business as , to provide various financial services, which includes mortgages, home equity loans and banking. operates one of Europe’s fastest growing hotel reservation services through , , and priceline.co.uk. It also operates the following travel websites: , , and . It also invests in an Asian travel service. It also operates in Hong Kong and Singapore as Priceline.

Key factors for evaluating an investment strategy for are as follows:

• A diversified revenue stream

• Personal finance services

• Competition from other travel suppliers and online agencies like Expedia Inc.

• Priceline does not expect to pay any cash dividends on its common stock in the foreseeable future

Of the 23 analysts covering the stock in the Zacks Digest group, 17 had a positive stance and six had a neutral stance. Target prices range from a low of $1,800.00 to a high of $2,300.00 per share, with the average being $2,032.19. The analysts used a P/E or EV/EBITDA multiple or DCF analysis to calculate their target prices.

Bullish (Buy or equivalent outlook) – 17 analysts or 73.9% – These analysts are positive about Priceline’s dominant position in the online travel agency (OTA) market. They are encouraged by Priceline’s long-term growth opportunities in this space and expect continuous market share gains from core European-based business. They are positive about the company’s growing market expansion and penetration capacities. They believe that the company has a size advantage in Europe and early-mover advantage in Asia-Pacific and Latin America, which it has been developing by building positive relationships with a large number of operators across the international hotel market.

These analysts believe that , Agoda, , OpenTable, KAYAK and will continue to gain traction in their respective markets. In the U.S., bookings have grown faster after the introduction of ’s express deal model. The company is expanding in the U.S. is growing fast in the Asia –Pacific market. They are positive about Priceline’s rapidly expanding vacation rental inventory. Currently, half of the company’s inventory of over 1.1 million total properties is vacation rentals. The company offers a total of 25 million bookable hotel rooms, homes, apartments and other accommodations.

Cautious (Neutral or equivalent outlook) – 6 analysts or 26.1% – These analysts remain positive about Priceline’s capacity to grow share in the OTA space, which is a secular growth market, strong business performance, strength in international markets, reasonable debt position, strong balance sheet and low capital intensity model.

But they are concerned about mounting competition from travel operators and payment solutions, supplier reduction and increasing advertisement spend. They are also aware about the fact that Priceline’s performance is highly susceptible to macroeconomic headwinds and disruptions in the travel industry (weather, natural calamities, terrorist attacks, etc.).

Another point of concern is Priceline’s continued weakness around airline tickets. They fear that higher air fares or hotel rates could be a major headwind and significantly impact the company’s results.

General Outlook: The analysts believe that long-term investors seeking well-positioned and well-executed companies may consider Priceline as a core Internet holding.

Dec 8, 2017

Overview

Headquartered in Norwalk, CT and founded in 1997, operates as an online travel company in the United States and Europe. It provides various travel services, including airline tickets, hotel rooms, car rentals, vacation packages, cruises and destination services. The company enables customers to make hotel reservations worldwide, primarily under the and Agoda brands internationally, and the brand in the U.S. In addition it offers other travel services as well, which includes airline tickets, rental car days, vacation packages, destination services and cruises in the U.S. These services are made available through websites and are provided by major travel suppliers worldwide. Therefore, the online travel category continues to experience significant worldwide growth as consumers shift from traditional offline channels to interactive online channels. has been a leader in the deep discount segment of this market in the U.S. as well as in the hotel reservation market internationally. The company’s strategy is to continue participating broadly in online travel growth by expanding its service offerings and markets. For more information about the company, please visit its website at .

Key factors for evaluating an investment strategy for Priceline are as follows:

|Key Positive Arguments |Key Negative Arguments |

|Priceline’s execution in international markets has been strong. |Competition in the online travel industry is intensifying with companies |

| |such as Expedia and Travelocity expanding their operations in the market. |

|The domestic business continues to gain market share and grow rapidly. | |

| |Apart from online agencies, Priceline faces competition from offline |

|The company is well positioned to outperform most competitors through the |agencies, travel suppliers, consolidators, direct websites, search engines|

|secular shift of European travel bookings from offline to online. |and meta-search changes. |

| | |

|The company is likely to exceed forecasts with the recovery of the macro |Priceline’s performance is highly susceptible to macroeconomic climate and|

|economy. |disruptions in the travel industry due to bad weather, natural disasters |

| |and terrorist attacks. |

|Priceline’s continued shift to additional product lines provide the | |

|company with a diverse revenue stream. |A slowing global economy, reduced consumer confidence, problems in the |

| |credit markets and competitive pressure could hurt demand, which might |

| |keep the company’s revenues and margins under pressure. |

| | |

Note: Priceline’s fiscal year ends on Dec 31.

Dec 8, 2017

Long-Term Growth

Online travel agencies strive to bring a wide gamut of services under one umbrella, thereby providing convenience to customers, especially those with price comparisons and bookings. Analysts believe that this market has the potential and is likely to grow, given that only one-third of global travel purchases are done online.

The U.S. is the largest online travel market followed by Europe. The U.S. market is mature and exhibits slower growth than U.K. Therefore, analysts believe that U.K. is going to be the next big thing for online travel agencies after the U.S. The countries like Latin America and Asia Pacific are at a nascent stage, but are believed to have significant long-term growth potential.

The hotel industry with comparatively much higher number of players is more fragmented than the airline industry. As a result, OTA’s coverage of hotel operators is considerably lower than that of airliners. To tackle this disadvantage, Priceline has been increasing its presence worldwide developing relationships with hoteliers. Analysts believe that the company’s size advantage, large customer base and networking effect would continue to boost growth.

As the online travel agencies rely on price-sensitive customers to make purchases of discretionary products, increased Internet usage has considerably raised online consumer travel expenditure. The analysts believe that online travel will continue to gain share from traditional channels and supplier sites, driven by convenience, selection and consumer experience over the long term.

Priceline faces significant competition from Expedia and Orbitz. Most of the analysts presume that Priceline is well positioned in the online travel space with the bulk of its business () derived from the agency model. The company is focused on the highest margin product (hotels) in fragmented markets (Europe and Asia) that are under-penetrated by online travel companies relative to the U.S. According to the analysts, this positioning provides Priceline a significant competitive advantage over its competitors.

The majority of the analysts are of the opinion that Priceline has been able to maintain a steady growth rate and gain market share by offering its products at discounted prices and creating increased awareness of its brands. The company also offers superior content than its peers and has a positive balance sheet and cash flow metrics. The company aims to enhance its free cash flow and shareholder value in the long term. Analysts believe Priceline will continue to benefit from continued market share gains. They are of the view that increasing Internet usage will contribute significantly to the company’s growth going forward.

Priceline also has a diversified revenue base. The company maintains that its long-term success is partially dependent on further expansion into the international market. Priceline generates over half of its gross bookings overseas, which diversifies its revenue base. Its growth is primarily driven by the strengthening of the European travel services. The European online hotel reservation market remains an excellent growth opportunity for Priceline. Unlike the U.S., the European market is highly fragmented and consists of a very few hotel chains, which reduces competition from the direct suppliers. Most of the analysts believe Priceline continues to grow through geographic expansion and is well positioned in the emerging markets with Agoda and (Asia Pacific region).

Dec 8, 2017

Target Price/Valuation

Provided below is a summary of valuation and ratings as compiled by Zacks Digest Research.

|Rating Distribution |

|Positive |73.9%↓ |

|Neutral |26.1%↑ |

|Negative |0.0% |

|Max Target Price |$2300.00 |

|Min Target Price |$1800.00↑ |

|Avg. Target Price |$2032.19 ↓ |

|No. of Analysts with Target Price/Total |16/23 |

The analysts believe risks to the target price include 1) dramatic decrease in global bookings, 2) increase in competition pressure from other OTAs or sellers, 3) macroeconomic challenges, 4) currency fluctuations, 5) higher advertisement costs, 6) a decline in the travel business, 7) Changes in search engine algorithms and 8) high European exposure.

Recent Events

On Nov 7, 2017, Priceline announced 3Q17 results. The highlights are as follows:

• Total revenues were $4.43 billion, up 46.6% sequentially and 20.1% from the year-ago quarter.

• Non-GAAP EPS was $35.22 compared with $29.69 in 3Q16.

• GAAP EPS was $34.43 compared with $10.13 in 3Q16.

Revenue

According to the press release, Priceline’s revenues of $4.43 billion were up 46.6% sequentially and 20.1% year over year.

On a year-over-year basis, both agency and merchant business showed strong momentum. Room nights and rental cars performed impressively. Room nights and Rental cars performed impressively. The only point of weakness was airline tickets.

Provided below is a summary of segmental revenues as compiled by Zacks Digest:

|Revenue ($ in million) |3Q16A |

| | |

|Copy Editor | |

|Content Ed. | |

|QCA/ Lead Analyst |Aniruddha Ganguly |

|No. of brokers reported/Total | |

|brokers | |

|Reason for Update |3Q17 Earnings Update |

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December 8, 2017

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