Janney Capital Markets Reiterates Neutral as Priceline.com's (PCLN) Growth Continues to Slow
Janney Capital Markets maintains a Neutral rating on Priceline (NASDAQ: PCLN), and raise the price target to $1,090 (from $1,075) following 1Q15 results. PCLN reported a revenue of $1.84B, compared to the consensus of $1.8B. They also reported an adjusted EBITDA of $532M, compared to a $512M consensus. Janney Capital says that while PCLN guidance is "notoriously conservative", growth continues to slow.
Janney Capital analyst, Brian McGill, says "We maintain our NEUTRAL on shares of PCLN because we believe the company’s growth rate will slow faster than expected due to issues with the European hotel business. We also think the business will be hurt by a maturing hotel market, limited opportunities to add valuable properties, actions by hoteliers, and macro factors. On the positive side, the company has an undemanding valuation versus its peers. Our FV is $1,090 (from $1,075) which is 13.5x our 2016 EBITDA."
McGill also added that, "We think investors were concerned with the 2Q outlook. While PCLN is notoriously conservative, the company forecast decelerating GB growth and pressure on margins. While EBITDA is expected to be down 5.5% at the high end, we think it’s reasonable to assume this equates to 12% growth on an FX-neutral basis. This is well below the 30%+ growth rates experienced in prior quarters."
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Shares of priceline.com closed at $1213.49 yesterday.