Does Priceline (PCLN) CEO Depart Signal Top? Deutsche Bank Comments

November 8, 2013 10:49 AM EST
Get Alerts PCLN Hot Sheet
Price: $1,545.82 --0%

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    31 Buy, 8 Hold, 0 Sell

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Deutsche Bank maintained a Buy rating on (NASDAQ: PCLN) and raised its price target to $1,240.00 (from $1,120.00). The change follows strong Q3 results and news its CEO is stepping down. Analyst Ross Sandler speculated about the timing of CEO Jeff Boyd's departure, but he doesn't think it will effect fundamentals.

Priceline had the typical beat-and-guide-conservative results for 3Q13," said Sandler. "Online advertising as a percentage of GP was only down 80bps Y/Y, the lowest rate of de-leverage in a year, resulting in 20bps of Y/Y margin expansion. Hotel room night growth of 36% Y/Y was well above industry average, demonstrating that PCLN continues to gain market share despite its significant size vs. its online peers, which drove 40% international bookings growth ex-FX. Domestic bookings re-accelerated for the third straight quarter on increasing traction in Express Deals."

"There were few negative items to point to in 3Q. Jeff Boyd's stepping down as CEO after 12+ years at the helm shouldn't raise any concerns on fundamentals as the bench is deep at PCLN and the business model is best-in-class, but obviously begs the question of "why now?" he said.

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Shares of closed at $1022.89 yesterday.

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