(PCLN) Tops Q2 EPS Views, But Cites Europe for Weak Q3 Outlook; Analysts Comment

August 8, 2012 11:44 AM EDT
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Price: $1,545.01 +0.39%

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    33 Buy, 8 Hold, 0 Sell

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    Up: 30 | Down: 30 | New: 23
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Join SI Premium – FREE (Nasdaq: PCLN) shares are getting slammed Wednesday following the online travel site's second-quarter 2012 earnings report, which produced strong results, but a light outlook.

Sales of $1.33 billion were lighter than views, but's adjusted EPS of $7.85 came in stronger than expectations. Looking ahead, said it sees third-quarter EPS of $11.10 to $12.10, which was lighter than the $12.82 consensus.

Analysts comment on the results:
  • Goldman Sachs kept at Buy, but cut its price target from $860 down to $760. Goldman noted that's third-quarter outlook was driving by weakness in Europe. Bookings growth is expected to slow from 36 percent in Q2 down to 19 percent to 27 percent in Q3. The firm commented, "Though 3Q guidance was below consensus expectations (Exhibit 1), we believe it’s likely this reset will be viewed similar to 1Q2010, the last time the company failed to
    exceed the high end of its guidance."

    For more from Goldman, click here.

  • Nomura also trimmed its price target on Neutral-rated priceline from $740 down to $700. On the Q3 outlook, Nomura said, "European tone (and in particular their guidance) was more guarded than most other travel and leisure companies’ this quarter. This, combined with the countercyclical nature of the OTAs, makes us question how much of this is macro-related vs. the laws of large numbers and natural deceleration."

    Nomura also noted how played off competition and affirmed that both are gaining in the online hotel market share, with's growing faster than Expedia in the U.S. and Europe through the first two quarters of 2012. Nomura did note that "is seeing deceleration in Europe and the U.S. (off of a much smaller base), which again speaks to the fact that PCLN looks set to continue to decelerate and that out-sized earnings beats are likely to get more difficult."

  • After the market closed Tuesday, Stifel Nicolaus downgraded shares of from Buy to Hold and BofA/Merrill Lynch also downgraded the company from Buy to Neutral. is down about 16 percent on Wednesday's session.

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