Priceline Profit Tops Analysts’ Estimates

Priceline.com Inc. (PCLN), the largest U.S. online-travel agent by market value, rose after first-quarter profit topped analysts’ estimates as travelers gravitated to the site to book hotel rooms. Shares rose the most in 10 weeks.

Profit, excluding some items, rose to $5.76 a share from $4.28 a year earlier, the Norwalk, Connecticut-based company said in a statement yesterday. Analysts on average had projected a profit of $5.27, according to data compiled by Bloomberg.

Even as a global expansion leaves the company vulnerable to economic weakness in some regions, Priceline is benefiting as its Amsterdam-based Booking.com signs up more international hotels, according to Naved Khan, an analyst at Cantor Fitzgerald & Co.

Priceline “continues to gain share in global hotel bookings,” Khan wrote in a research report.

Priceline increased 3.6 percent to $764.18 at 12:18 a.m. in New York, and earlier touched $769.67 for the biggest intraday gain since Feb. 27. The shares had climbed 19 percent this year through yesterday, compared with a 14 percent advance for the Standard & Poor’s 500 Index.

First-quarter revenue jumped 26 percent to $1.3 billion, beating the average projection by analysts for $1.28 billion.

International Bookings

International bookings at Priceline climbed 43 percent to $7.78 billion in the quarter, accounting for 85 percent of total bookings. In addition to Booking.com, Priceline owns Bangkok-based Agoda.com, giving the company access to travelers in Asia.

Even as bookings gained, Chief Executive Officer Jeffery Boyd expressed caution about the company’s growth potential.

“We continue to see economic uncertainty in certain regions, and competition in the online travel sector remains intense,” Boyd said in the statement.

Priceline’s profit forecast for the current quarter of $8.87 to $9.45 a share lags the $9.59 average analysts’ estimate.

“While management’s second-quarter outlook is somewhat light, we do not view it as a reason to be concerned, given that it reflects a cautious view in a risky macro environment,” Khan said.

Priceline increased first-quarter online advertising spending 45 percent to $403.2 million. The majority of its spending is on Google Inc.’s search engine.

Economic Headwinds

Net income for the first quarter rose 34 percent to $244.3 million, or $4.76 a share, from $182 million, or $3.54, a share, a year earlier.

“The guidance is just them being conservative,” said Edward Woo, an analyst at Ascendiant Capital Group LLC in Irvine, California, who recommends buying the shares. “They had generally OK to positive earnings. I wouldn’t be too concerned, even though the company said there are additional economic headwinds.”

The company said yesterday its acquisition of hotel-search engine Kayak Software Corp. (KYAK) has cleared regulatory hurdles and will close on May 21, adding profitable search tools to its services that help consumers book flights and hotels online.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.