Travelzoo (TZOO - Get Report) was the third-best performer in the Russell 2000 last week, gaining 26.3% to close at $34.65. Year-to-date, shares of the New York online marketer of travel and entertainment deals are up an incredible 118%.
In this case, a strong earnings report on Thursday was the impetus for the big gains. Travelzoo posted a profit from continuing operations of $3.7 million, or 22 cents a share, for the three months ended Sept. 30, up from year-ago equivalent earnings of $1.3 million, or 8 cents a share, and well ahead of Wall Street's consensus estimate for a profit of 11 cents a share.Wedbush Morgan lifted its 12-month price target on Travelzoo to $40 from $32 following the report, saying the results were "much better than expected as Europe finally reached profitability." The firm also cited rising valuations for online travel companies as a potential catalyst from Travelzoo, noting appreciation in the shares of competitors like Expedia (EXPE), Orbitz Worldwide (OWW), and Priceline.com (PCLN) as well as Google's (GOOG) acquisition of ITA Software for $700 million.