NEW YORK (TheStreet) -- Shares of Priceline Group (PCLN) are falling 0.81% to 1,129.12 after it was downgraded to "hold" from "buy" today by analysts at Deutsche Bank Markets Research, and its price target was lowered to $1,325 from $1,425.
The firm cited slowing growth, margin pressure, and rising risks from Airbnb, a website for people to rent out lodging.
However, the positive factors are that Priceline has a strong lead in hotels, superior execution and an under-appreciated strategic play in BookingSuite, analysts said.
Near term, analysts expect strong bookings growth and better margin guidance for the third quarter.
Priceline Group provides online travel, reservation, and search services.
Separately, TheStreet Ratings team rates PRICELINE GROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate PRICELINE GROUP INC (PCLN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Internet & Catalog Retail industry average. The net income increased by 0.6% when compared to the same quarter one year prior, going from $331.22 million to $333.33 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 18.8%. Since the same quarter one year prior, revenues rose by 12.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 3.14, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, PRICELINE GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for PRICELINE GROUP INC is currently very high, coming in at 89.96%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.10% significantly outperformed against the industry average.
- You can view the full analysis from the report here: PCLN Ratings Report