Paris Terrorist Attacks Likely To Impact Priceline Q4 Earnings
Online travel agency giant Priceline Group ( PCLN ) is set to report its Q4 earnings on Wednesday before the market open, with the global economy in focus. Analysts polled by Thomson Reuters are expecting single-digit sales and earnings gains. The top line is estimated to grow nearly 6% from the year-earlier quarter, to $1.95 billion. Earnings per share minus items are expected to rise almost 9% to $11.80. Priceline stock is up more than 4% in afternoon trading on the stock market today , near 1,106. The company has an IBD Composite Rating of 72, in which 99 is the highest. Like most stocks, Priceline has had a tough year since touching a record high above 1,476 in November. Priceline stock hit a 29-month low of 954 last week. Online travel rival Expedia ( EXPE ) last week said the terrorist attacks in Paris last year did have an impact on Q4 earnings results. Expedia executives, however, said they were confident that foreign exchange would be less of a factor in 2016, which eased investor worries as travel stocks rose. TripAdvisor ( TRIP ), a travel reviews site, last week also released better-than-expected Q4 earnings , further bolstering the sector. But, RBC Capital Markets analyst Mark Mahaney says several factors will contribute to Priceline’s growth in Q4 being “less than usual.” The terrorist attack on Paris in November likely hurt revenue, he wrote in a research note Feb. 12, and Web traffic is slightly lower. Still, Mahaney says that Wall Street estimates are “reasonable.” Citing data from Smith Travel Research, Mahaney wrote that the hotel industry has experienced slightly negative occupancy rates and other key metrics. For Q4, Mahaney forecasts an 8% decline in U.S. bookings but a 23% rise in international bookings. The profit margins of earnings before interest, taxes, depreciation and amortization (EBITDA) might continue to fall, he says. Mahaney reiterated RBC’s price target of 1,700 on Priceline stock, citing three new areas of growth: outbound travel from China and (to a lesser extent) Latin America, and growth in vacation rentals and alternative accommodations. San Francisco-based privately held Airbnb — which investors have valued at over $20 billion (Wall Street values Priceline at over $54 billion) — has pioneered the alternative accommodations category, but as of late has been criticized for its approach to new markets. Critics say “begging for forgiveness vs. asking permission” is an expensive strategy that is unsustainable in the long term. Airbnb spent more than $8 million in San Francisco to fight legislation that would have further tightened regulations targeting firms such as itself and Expedia-owned HomeAway, which also is in the alternative accommodations business. Priceline and Expedia have taken note of Airbnb’s success and are building up competitive offerings.