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Priceline flirts with $1,000-a-share mark

SAN FRANCISCO — Priceline.com Inc. surged closer to the $1,000-a-share milestone Friday, as investors reacted positively to a quarterly report that continued to support the firm's status as the kingpin of the online-travel agency market.

Priceline's stock ended the day with a gain of $36.14, or almost 4 percent, at $969.89 after earlier reaching an all-time high of $994.98 in the wake of the company's second-quarter results late Thursday.

The company reported a profit of $437 million, or $8.39 a share, on $1.68 billion in revenue. During the same period a year ago, Priceline reported a profit of $352 million, or $6.88 a share, on sales of $1.33 billion.

Excluding one-time items, Priceline would have earned $9.70 a share, which exceeded the estimates of analysts surveyed by FactSet. They forecast the company to earn $9.38 a share on revenue of $1.65 billion.

During the quarter, Priceline said it had total bookings of $10.1 billion, up from $7.83 billion a year ago. The company's international operations continued to provide the vast majority of Priceline's business, making up $8.6 billion of the quarter's bookings.

"The main driver (of growth) has been international," said Aaron Kessler, of Raymond James. "International is now about 90 percent of profits, and they have become the leading international online travel agency."

Kessler raised his price target on Priceline's stock to $1,100 share from $1,050 and maintained his outperform, or buy rating on the company's shares.

Priceline said growth in hotel-room nights was among the main factors that lifted its results, as the company reported bookings of 69.4 million room nights during the quarter, a 38 percent increase from the same period a year ago.

Ken Sena, an analyst with Evercore Partners, said it's Priceline's Booking.com business, which lists more than 335,000 hotels around the world, that is the key source of the company's performance and why the Priceline's stock price has risen almost 59 percent this year, and is up 75 percent over the past year.

"Much of it has little to do with Priceline.com," Sena said. "It really is Booking.com, the international brand which Priceline acquired in 2005, and which became the leading online-travel agency globally."

Sena added that Booking.com has the highest marketing efficiency in the online-travel industry, and gets high marks for both the quality and quantity of its supply of hotels. Sena has an overweight rating and $1,100-a-share price target on Priceline's stock.

Credit Suisse analyst Stephen Ju raised his price target on Priceline's stock to $1,200 a share from $924 saying that the company remains "an open-ended growth story" and remains able to show it can gain share in international markets.

"Management continues to find a good balance between growth and profitability as Priceline.com continues to invest into its global expansion strategy while at the same time returning value to shareholders," Ju said in a research note.

Priceline flirts with $1,000-a-share mark 08/09/13 [Last modified: Friday, August 9, 2013 10:41pm]
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