Priceline Surges: What Wall Street Thinks

NEW YORK ( TheStreet) -- Priceline.com ( PCLN) shares are surging this morning, gaining 6.1% to $990.58 after the online travel company reported second-quarter results that blew away Wall Street's expectations.

Norwalk, CT.-based Priceline reported second-quarter earnings of $9.70 a share on $1.68 billion in revenue, an increase of 37.8% fa year earlier, as travel bookings rose 38%. Analysts were looking for a profit of $9.36 per share on $1.66 billion in sales.

For the third-quarter, Priceline said it expects total gross booking to show a an increase of between 27% and 34%, or 25%-32% on a local currency basis. The company expects revenue to rise between 23% and 30% year-over-year, with Adjusted EBITDA coming in between $990 million and $1.055 billion. It expects Non-GAAP earnings to be between $15.30 and $16.30 per share, slightly below analysts' forecasts.

As Priceline shares "negotiate" towards $1,000 (something that was mentioned as a possibility last year), several analysts on Wall Street are raising their price targets significantly on the Internet giant.

Here's what they had to say.

JPMorgan analyst Doug Anmuth (Overweight, $1,130 PT)

"We believe Priceline continues to gain share across Int'l markets and is also making good progress in the U.S. despite elevated levels of marketing spend across all the OTAs. 2Q EBITDA margins of 44.9% came in ahead of plan even with the inclusion of Kayak and management guided to ~250 bps of Y/Y deleverage in 3Q, which was better than expected. We are encouraged by Priceline's ability to continue to gain share in a challenging environment and we believe Y/Y margin pressures should ease some in 2H13 as Priceline laps heavier spending. We reiterate our Overweight rating & our PT goes to $1,130 from $1,040."

Deutsche Bank analyst Ross Sandler (Buy, $1,120 PT)

"Priceline reported gross profit and EPS 3% above our estimates, fueled again by strong growth in international hotel. More importantly, the 3Q13 guidance implies an improving trajectory for EBITDA margin, which could approach flat Y/Y in the quarter for the first time in a year, and would help fuel multiple expansion. PCLN is executing better than most companies in the broader Internet sector, and its ~30% EPS growth vs. a 18x P/E, remains one of the most attractive risk/rewards. We have increased our 2014 EPS by 3%."

Benchmark analyst Daniel Kurnos (Overweight, $1,100 PT)

"3Q guidance again called for a moderation in growth, but mostly matched consensus at the high end, implying upside to 3Q numbers given Priceline's historically conservative outlooks. With Booking.com making headway domestically, international growth remaining elevated despite macro pressures and Kayak set to be rolled out on a larger scale, we believe Priceline will be able to maintain its operating momentum."

Cantor Fitzgerald analyst Naved Khan (Buy, $1,050 PT)

"Priceline posted impressive 2Q results that easily topped Street expectations on strong growth in bookings and room nights and better margins. While relative stability in the company's core European market and strength in AsiaPac continues to power international bookings, the company also likely gained ground in the US, benefiting from increased TV ads and Expedia's mis-execution on TripAdvisor, in our view. We believe that Priceline's market share gains will continue given its best-in-class hotel inventory, while the likely deployment of Kayak in more international geographies should open further avenues for growth over the next 12-18 months."

-- Written by Chris Ciaccia in New York

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