Nomura Securities on Online Travel Agencies: ADR Deep Dive
PCLN Hot Sheet
Rating Summary:17 Buy, 1 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 20 | Down: 11 | New: 38
Nomura Securities on Online Travel Agencies: ADR Deep Dive
Analyst, Brian Nowak, said, "European ADR growth has been steadily declining throughout 2011 and in 4Q:11 turned negative for the first time since 1Q:10. Historically, when European ADR growth turns negative, it stays negative for 6-14 qtrs. This raises a new risk to PCLN’s 2012 bookings as European hotels make up ~55% of PCLN’s total bookings. U.S. ADR growth, on the other hand, has remained relatively steady throughout 2011 (~3-4%) and is expected to remain in a similar range in 2012. In addition, we have updated our Nomura U.S. Hotel Survey and found that a majority of hotels in seven of the eight markets expect to maintain or decrease their level of OTA use…more evidence that the U.S. market will continue to be difficult to grow in for the OTAs. We are lowering our 2012E PCLN EPS by 2% due to the ADR reduction, partially offset by a modest reduction in advertising de-leverage."
Priceline (Nasdaq: PCLN)(Reduce): 2011E EPS from $23.10 to $23.19; 2012E from $28.59 to $28.16; PT raised from $460 to $490.
Expedia (Nasdaq: EXPE)(Neutral): 2011E EPS from $1.98 to $1.99; 2012E from $2.97 to $2.68
Orbitz (NYSE: OWW): 2012E EPS from $0.15 to $0.18; Raise PT from $2.25 to $2.50
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Analyst, Brian Nowak, said, "European ADR growth has been steadily declining throughout 2011 and in 4Q:11 turned negative for the first time since 1Q:10. Historically, when European ADR growth turns negative, it stays negative for 6-14 qtrs. This raises a new risk to PCLN’s 2012 bookings as European hotels make up ~55% of PCLN’s total bookings. U.S. ADR growth, on the other hand, has remained relatively steady throughout 2011 (~3-4%) and is expected to remain in a similar range in 2012. In addition, we have updated our Nomura U.S. Hotel Survey and found that a majority of hotels in seven of the eight markets expect to maintain or decrease their level of OTA use…more evidence that the U.S. market will continue to be difficult to grow in for the OTAs. We are lowering our 2012E PCLN EPS by 2% due to the ADR reduction, partially offset by a modest reduction in advertising de-leverage."
Priceline (Nasdaq: PCLN)(Reduce): 2011E EPS from $23.10 to $23.19; 2012E from $28.59 to $28.16; PT raised from $460 to $490.
Expedia (Nasdaq: EXPE)(Neutral): 2011E EPS from $1.98 to $1.99; 2012E from $2.97 to $2.68
Orbitz (NYSE: OWW): 2012E EPS from $0.15 to $0.18; Raise PT from $2.25 to $2.50
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