The Norwalk, CT-based online travel service is the best positioned to benefit from faster growth in Asia, but a stronger dollar and competition will weigh on Priceline's performance, the firm said.
Additionally, Priceline's focus on marketing and customer acquisition techniques could hurt the company's margin expansion opportunities, Goldman Sachs added.
In general, online travel companies are being hurt by high occupancy rates, which have caused hotel suppliers to raise rates, the firm said. Travel companies such as Expedia (EXPE) and TripAdvisor (TRIP) are also hurt by rising competition from alternative accommodation sites like Airbnb.
"While we believe there is still secular growth in the category as consumers continue to move bookings online, Millennial spend more on travel, and earlier stage Asian and LatAm markets grow, we believe investor expectations for OTA growth and profitability may prove too high," the firm said.
Priceline stock is down by 2.88% to $1,079.50 in pre-market trading on Wednesday.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "buy" with a ratings score of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
You can view the full analysis from the report here: PCLN