Expedia (EXPE) Lifts Sector on Q2 Beat, May Set Up Priceline.com (PCLN) for More Upside

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Expedia Inc. (Nasdaq: EXPE) shares are ripping higher Friday following strong second-quarter 2012 results, issued after U.S. markets closed Thursday night.

Revenue saw a 14 percent to $1.04 billion, from $913.6 million in the same period last year. Adjusted net income rose 24 percent to $125 million, or 89 cents per share. The Street was looking for EPS of 71 cents and revs of $990.7 million.

Numbers are slightly contradictory to what recent spin-off Tripadvisor (Nasdaq: TRIP) reported on July 24th, with EPS coming in-line and revs missing views.

Setting up for a potential pop is priceline.com (Nasdaq: PCLN). Shares are currently over 15 percent off of all-time highs of $774.96 hit in April, mostly on the back of fears that travel will slow due to the crisis in Europe and stagnant U.S. economy.

Then you look at some of Expedia's numbers and results seem even more solid:

• Gross bookings up 13 percent;
  
• Room night growth up 78 basis points to 22 percent; and
  
• Air tickets sold rose 3 percent (Expedia attributed most of this to the VIA Travel acquisition).

For priceline.com, the company is targeting gross bookings to increase 26 percent to 31 percent in its upcoming quarter, revs increasing 18 percent to 23 percent, and non-GAAP EPS of $7.20 to $7.40. Whether these goals will be met or not is a good question every investor in the company wants answered, but given that bookings rose 43.9 percent while revs rose over 28 percent with last quarter's report, investors might be seeing more upside in the stock over the next few weeks. Priceline will report results on August 7th.

As for total competition, Expedia is pushing peers higher, with Tripadvisor up 3.3 percent, priceline up 4.4 percent, Orbitz (NYSE: OWW) up 2.6 percent, and Travelzoo (Nasdaq: TZOO) up 2.6 percent.

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