Worldwide Traffic Checks Suggest A Strong Q4 Ahead For Priceline

Cantor Fitzgerald’s Naved Khan expects Priceline Group Inc (NASDAQ: PCLN) to report robust results, in line with the estimates and toward the high end of the guidance, when the company announces its fourth-quarter results Monday.

The analyst maintains an Overweight rating on the company, with a price target of $1,750.

Robust Q4 Expected

Khan’s expectations for Q4 are based on checks on worldwide traffic and hotel pricing trends that were conducted during the quarter, along with the positive read through from the results reported by Expedia Inc (NASDAQ: EXPE) earlier in February.

“While FX is likely to weigh on 1Q17 outlook, the company's FX-neutral guide should still show strong underlying growth trends,” the analyst mentioned.

For Q4, Khan expects gross profit of $2,219 million, with EPS of $12.82 and EBITDA of $816 million, mostly in line with the consensus expectations and at the high end of the guidance range.

“We expect FX to result in a headwind of $47M to gross profit and a $0.37 hit to EPS vs. our expectations,” the analyst stated.

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Positive Checks

Khan noted that checks indicate an increase in European lodging demand during Q4, along with slow but steady growth in traffic in the United States, with room rates rising 2.6 percent and occupancy rising 0.6 percent in Q4.

Worldwide air traffic data indicated robust growth in air travel with revenue passenger kilometers rising 7.4 percent during the quarter, as compared to 5.8 percent in Q3.

“Worldwide Search interest for Booking.com tracking above expectations. Y/Y growth in Search query interest for Booking.com improved by 100bps Q/ Q in 4Q, based on our analysis of data from Google Trends,” the analyst went on to say.