The Priceline Group (PCLN) Sell-Off on Brexit was Excessive - Jefferies

June 27, 2016 7:16 AM EDT
Get Alerts PCLN Hot Sheet
Price: $1,905.64 --0%

Rating Summary:
    0 Buy, 0 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 10 | Down: 13 | New: 20
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Jefferies US Internet Team said the immediate 11.4% sell-off in shares of The Priceline Group (NASDAQ: PCLN) of Friday was excessive. The firm reiterated a Buy rating price target of $1,660 on PCLN.

"We think the immediate stock reaction to the Brexit decision creates a compelling entry point in the stock," the team led by Brian Fitzgerald said.

He added, "While Priceline has the highest exposure to Europe among OTAs, its exposure to the British Pound is minimal (estimated at ~1% of revenue). Its exposure to the Euro is much higher (estimated at ~71% of revenue) but the company has a natural hedge against fluctuations in the Euro in the form of Booking.com (headquartered in Amsterdam, the Netherlands). As Priceline has disclosed in filings, its “operating margins are not significantly impacted by currency fluctuations” because its “expenses are generally denominated in foreign currencies on a basis similar to [its] revenues.” We believe that Eurodenominated OpEx is probably in the range of 55%-65% of total given that revenue booked through Netherlands is 67% of total. That makes Priceline’s bottom line net exposure to the Euro less than 10%. In addition, management has been using active hedging to protect the bottom line for years and the ultimate impact on EPS should be in the low single digits, in our view."

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 $1232.14 yesterday.



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