Wednesday, June 18, 2008 (NASDAQ:PCLN): Expect Share Gains to Continue; Adding as an Internet Top Pick - Piper Jaffray

- Piper Jaffray is adding (NASDAQ:PCLN) as their Internet Top Pick with a $175 tgt after hosting CFO, Bob Mylod, for two days of marketing.

PJ continues to have a very positive outlook on PCLN's European growth prospects (estimates Europe accounts for over 70% of PCLN's operating profits). Priceline is aggressively hiring personnel, expanding into new markets, and generally feels good about its unit sales. Also, they believe the European hotel market will be much more resilient than that of the U.S. market given higher priority Europeans put on leisure travel and the lower costs of getting to destinations in Europe (i.e. discount airlines).

In Q1, Priceline experienced 50% bookings growth in the U.S., its fastest level of growth in the last several years PCLN is clearly benefiting from its no-booking fee airline promotion which drove 83% y/y growth in airline tickets. PCLN also believes the no-booking fee offering is driving increased site traffic and increased hotel and car rental bookings – as an example, rental car booking days increased 30% y/y in 1Q vs. 14% in 2Q07. Firm believes PCLN's recent Chop-A-Thon promotion (reduces booking fees on hotels) also has potential to drive increased traffic share for PCLN.

Sees valuation as attractive at 18x '09 PF EPS vs. expected 25% plus LT EPS growth.

Notablecalls: One to watch today.

1 comment:

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