The Priceline Group (PCLN) PT Lowered to $1,600 at RBC Capital

RBC Capital analyst Mark Mahaney reiterated an Outperform rating but trimmed his price target on The Priceline Group (NASDAQ: PCLN) to $1,600.00 (from $1,700.00) following a Q1 beat but lower guidance.

Mahaney commented, "Total Bookings of $16.65B beat Street/RBC expectations, while Revenue of $2.15B also exceeded Street/RBC, as did EPS of $10.54. The normal key factors at work, tho Easter timing also helped. PCLN saw consistent strength across all regions. Issue is the Guide. Q2:16 outlook was below the Street across every line, with the company citing Easter shift, negative impact of Ramadan and EuroCup, tentatively weak macro trends in ADRs and cancellation rates, and stepped-up U.S. brand advertising spend on behalf of Booking.com. We believe long-term fundamentals are well intact, but the near-term turbulence is greater than we anticipated."

Keys to the quarter, according to the analyst:

1) Organic Growth Trends Robust – 26% Y/Y Bookings (ex-FX), 31% Y/Y Hotel Room Night, and 27% Y/Y Gross Profit (ex-FX) – all were accelerations, tho Easter shift did help.

2) Q2 Outlook Implies Deceleration – for the reasons listed above…we think better read into underlying growth may be H1…looked at this way, PCLN on track to deliver Room Night growth in ’16 at levels at or above ’15…that is Bullish.

3) Stable Margin Trends – 33% Op. Margin was up 180 bps Y/Y (best trend in years), tho Online Advertising continues to delever.

4) Sizeable Share Repos & FCF Generation – Repo’d $259MM in Q1 and generated $290MM in FCF.

5) Outpaced EXPE In Room Night Growth and Bookings – Despite a larger hotel room night base, outgrew EXPE 31% vs. 24%.

2017 Bookings & Revenue reduced 2% and ’17 Gross Profit, EBITDA & EPS reduced 4%-5%.

For an analyst ratings summary and ratings history on The Priceline Group click here. For more ratings news on The Priceline Group click here.

Shares of The Priceline Group closed at $1354.64 yesterday.

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