NEW YORK (
) -- -
(PCLN - Get Report)
could be a good bet for investors in 2013, according to
Bank of America Merrill Lynch
, which upgraded the online travel specialist to buy on Thursday.
The investment bank cited Priceline's Booking.com business, ongoing strength in international markets, the potential for a modest European recovery and its recent surprise
Set against this backdrop, BofA Merrill Lynch raised its Priceline price objective to $770 from $690.
The upgrade helped lift Priceline's stock during Thursday's trading. Shares of the Norwalk, Conn.-based firm were up 2.38% to $653.62 in early afternoon trading, easily outpacing
gain of 0.03%. The stock also crossed its 200-day moving average of $648.54.
"We see more near-term potential to 2013 estimates than [rival]
(EXPE - Get Report)
," wrote BofA Merrill Lynch analyst Justin Post, in a note released on Thursday.
For the company's current fiscal fourth quarter, BofA Merrill Lynch said it expects Priceline to report earnings of $6.68 a share, compared to Wall Street's forecast of $6.52. For fiscal 2013, the investment bank increased its Priceline earnings estimate from $38.40 to $38.67 a share and its revenue forecast from $6.31 billion to $6.36 billion. Analysts surveyed by
expect earnings of $37.45 a share and revenue of $6.275 billion.
"Aided by an increasing mix of APAC (Asia Pacific), LATAM (Latin America), and Booking.com's U.S. bookings, we see a company with an attractive growth profile, estimate upside potential and a reasonable multiple with room to expand," wrote Post. "If Europe were to recover in 2H, Priceline is the most exposed in our coverage group as a percentage of profit."
Clearly keen to drive both organic and inorganic growth, Priceline recently made a shock $1.8 billion move to acquire Kayak, seen as a
shrewd piece of M&A
that will build on its successful purchases of Booking.com in 2005 and hotel reservation service Agoda in 2007.
"While [the] deal is expected to be neutral to 2013 EPS and isn't that significant (cost is around 5% of Priceline's market cap), we have a favorable view on the acquisition, with the opportunity for Priceline to build Kayak into a strategic traffic hedge to
(GOOG - Get Report)
for Booking.com globally," wrote Post.
Priceline also is perfectly positioned for the
, offering investors another way to tap into the explosion in gadgets such as
(AAPL - Get Report)
iPad and iPhone and Google Android devices.
The company's shares have risen 34.6% over the last 12 months.
Ratings rates Priceline a buy.
--Written by James Rogers in New York.
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