Merrill Lynch downgraded Priceline.com (PCLN) to near term neutral from buy.
Analyst Justin Baldauf says first quarter earnings per share was disappointing, and notes weakness in the core discount airline tickets business. He says the company is particularly dependent on the most competitive segment of the online travel market: airline tickets. He notes the company continues to be exposed to adverse conditions and volatile supply/demand trends in the airline industry.
Baldauf sees $0.12 2002 EPS vs. $0.16 for 2003. He believes shares are fully valued as Priceline is trading at a 50% premium to the S&P 500, the growth outlook uncertain, and there's a lack of visibility on the upside to his 2003 estimates. Baldauf rates Priceline as a long term buy.