Oppenheimer Explains Implications For Priceline Following Expedia's Report

Expedia Inc. (NASDAQ: EXPE) reported lower-than-expected fourth-quarter results on Thursday after market close. These were driven mainly by continued losses from eLong and FX.

In a report published Friday, Oppenheimer analyst Manish Hemrajani says Expedia's results suggest (to them, at least) that Priceline Group Inc's (NASDAQ: PCLN) results “could come in at the high end of its guidance range with room night growth at or above 28% given the historical track record.” Thus, the firm maintained and Outperform rating on Priceline, accompanied by a $1,300 price target.

Shares were down 2.5 percent at $1,018.25.

Oppenheimer’s hypothesis is based on its analysts of both companies’ results over the past eight quarters. According to the report, Priceline’s international revenue/bookings/room nightgrowth outpaced Expedia’s every time. The firm now projects bookings/room night growth of 17 percent -- this suggests some upside to its fourth-quarter estimates and management's conservative guidance. “Competition, however, could keep spend levels elevated,” the analysts explain.

Despite the bullishness, Oppenheimer had to adjust its model “purely on FX,” as the euro moved to $1.15, versus the expected $1.18: “FY15 revenue/EPS estimates go to $9.59B/$57.92 from $9.65B/$58.43 (…) FY16 estimates are now $11.12B/$67.84 from prior $11.21B/$68.29. We [the analysts] anticipate conservative 1Q15 guidance when PCLN reports on 2/19.”