The Associated Press August 4, 2010, 12:04PM ET

Priceline soars after strong 2Q results

Shares of online travel site Priceline.com Inc. soared Wednesday to a 10-year high, after the company reported a 71 percent surge in second-quarter net income as travelers booked more trips.

The results, which smashed forecasts, sent Priceline stock up almost 23 percent in midday trading.

The company said the strong performance was once again driven by growth in global hotel reservations, as hotel room nights booked rose 48 percent year-over-year. International gross travel bookings increased 59 percent, due to rising travel demand and an improvement in room rates, and domestic bookings were up 20 percent, said Jeffery H. Boyd, Priceline's president and CEO. He added that growth in airline tickets and domestic rental car days was modest as Priceline's Name Your Own Price airline and rental car services were hampered by suppliers trimming capacity.

Late Tuesday, Priceline said it earned $115 million, or $2.26 per share, in the quarter that ended in late June. That's up more than 70 percent from last year's net income of $67.1 million, or $1.38 per share. Excluding one-time items, the company's adjusted income totaled $158.2 million or $3.09 per share, in the latest period.

Revenue climbed 27 percent to $767.4 million from $603.7 million last year, with international operations contributing $322.6 million, up 63 percent versus a year ago.

Analysts surveyed by Thomson Reuters had expected the company to earn $2.64 per share for the quarter on revenue of $733 million. Those estimates exclude one-time items.

Priceline said that bookings in the second quarter were $3.4 billion -- up 43 percent from last year. The company's May 2010 acquisition of international car hire service TravelJigsaw contributed $43.9 million to quarterly gross travel bookings.

The results prompted a series of analysts to boost price targets on the Norwalk, Conn., company's stock, saying they expect shares to keep growing in the next year.

Caris & Co. analyst Sandeep Aggarwal said the second-quarter results show the company is "cruising past ... expectations." Maintaining a "Buy" rating on shares, he told investors he expects the stock to eventually climb 30 percent and reach $300 per share in the next year.

RBC Capital put the figure even higher at $310 while Citigroup pegged the stock's eventual rise to $325.

Looking ahead, Priceline said it still expects gross travel bookings growth will progressively decline in the second half of 2010 as it compares to periods of relatively stronger business performance in the 2nd half of 2009.

On a per share basis, the company is forecasting third-quarter net income of $4.06 to $4.26. That compares with analysts' average estimate of $4.18 per share.


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