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Priceline’s (PCLN, NASDAQ, 52 week range 411.26 – 713.12) successful growth has resulted in its stock price rising about 50 percent since the start of the year. Today, it hit a new all time high, reaching over $700 per share on a down day for the markets, mostly on the news that Piper Jaffray analysts are looking for the shares to hit $1,000 per share in two years and posting earnings of about $50 per share in 2014. Investor Business Daily put a buy on the shares at $550.
Piper’s rational is that with the increase of tablets and smart-phones, travel bookings online will continue to take business from the traditional travel agencies. Additionally, Priceline will use “aggressive tactics” to increase brand awareness to maintain leadership internationally. It currently offers 185,000 hotels in 160 countries through Booking.com, Priceline.com and Agoda.
There is more room for growth in the online travel booking market, which currently is 60 percent of the market in the U.S., 40 percent in Europe and only 15 percent in the emerging markets.
For Hawaii, the online booking market is important as we have a lot of last-minute, impulse travelers, especially from California who are Internet savvy. There’s also a push for more international tourists from Asia. Priceline.com alone offers 27 hotels on Kauai, 80 on Oahu, 29 on Maui, 11 in Hilo and 21 in Kona, for a total of 168 Hawaii hotels.
As far as the company’s financial performance, over the last 12 months, it posted revenues of $4.36 billion with a profit margin of almost 25 percent. Its balance sheet shows $2.66 billion in cash with only $575 million in debt. Thomson First Call is looking for 2012 earnings of $31.22 per share, vs. $23.45 in the year earlier period and increasing to $38.31 per share in 2013. The company has also beaten to upside earnings expectation the last four quarters.
My personal experience with Booking.com on a recent trip to Spain was very favorable, but I am sad that they “killed-off” company spokesperson Captain Kirk/William Shatner in a January ad campaign.