Is naming your own price recession-proof? Shares of Priceline.com jumped nearly 17 percent this morning above $80 a share on earnings that barely noticed ongoing pain in the rest of the economy.
Fourth-quarter earnings of $1.29 a share were well above Wall Street consensus of $1.05. U.S. bookings managed to grow 31 percent from a year ago, and European travel climbed even faster through Priceline's Booking.com site. International hotel bookings climbed almost 35 percent thanks to a glut of available rooms. In all, customers bought nearly $1.5 billion worth of travel services through the site in the quarter, up almost 23 percent from a year ago.
Justin Post at Bank of America/Merrill Lynch backed his buy rating on Priceline and said in a note that the quarter "reinforces our view that Priceline’s value offerings will hold up better that the market, which could enable multiple expansion as a relatively 'safer' investment." He also notes the Priceline business model offers some relative earnings stability in the downturn as it gains share from price-conscious consumers and offers room to grow when travel rebounds. He raised his price target to $98 a share based on 2009 earnings of $6.15 a share, up from earlier estimates of $81 and $5.80. Citigroup raises its price target as well to $105 from $83, and S&P upgraded it to "buy" from "hold" with a price target of $90, up from $75.
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