Priceline Names It’s Price, Gaps Up

Serial destroyer of earnings estimates (PCLN) has done it yet again.  The online travel company reported EPS of $1.99 excluding items such as stock-based compensation on revenue of $541.8 million.  These results handily beat estimates of $1.68 and $529.8 million, and were good for 54% and 33% year-over-year gains.  Guidance was strong as well, as management forecasted Q1 2010 EPS of $1.54 – $1.64, well above Street estimates of $1.41.  Priceline has now beaten analyst estimates by at least $0.18/share for six consecutive quarters.

Gross bookings grew 81% YOY internationally and 21% in the U.S., and total hotel nights grew 60% overall.  The report prompted one industry analyst to remark that, “everything in the online travel industry is looking up,” but Priceline’s CEO Jeffrey Boyd tried to cool things off a bit.  He noted that the growth in gross bookings was due not only to the strong underlying fundamentals of the industry, but also to “weak results in the prior year period amidst the global recession and improving currency and ADR comparisons.”  As a result, he warned that investors should not expect such extremely outsized gains going forward, though just regular outsized gains will likely do the trick.

PCLN has a real habit of gapping up on earnings and it’s hard not to admire the way the stock can move on good news.  Leading into the report shares had been forming a nice cup-with-handle base dating back to about December 29th, but shares gapped right past the potential $230.59 buy-point in fast trade.  It’s hard to get behind a stock that is up so much over the past year, but it is worth noting that shares had been trading around the 200-range since early-Novemeber, indicating a level of comfort for the shares at those levels.

As far as a trade is concerned, gapping up out of any pattern on high volume is very bullish, but the fact that shares were not actually allowed to form a proper cup-with-handle may be cause for worry.  Considering the news out of the Fed has Dow futures down about 100 points after-hours, I’d recommend waiting to see if PCLN can perhaps form a handle on it’s incomplete cup and then buying on a breakout from there.

Disclosure: No holdings in PCLN.