Samantha Fischler is a Financial Analyst at I Know First. She is currently a candidate for her bachelor’s degree in Accounting with a Concentration in Finance at Binghamton University.

Priceline Stock Prediction

Summary

Priceline reports strong earnings for Q3

Priceline to be more cautious when dealing with OpenTable operations

Artificial Intelligence making its way into Priceline’s day-to-day

CTrip investment could prove very useful with election of Donald Trump

I Know First is bullish on PCLN

Q3 Earnings

If PCLN’s third quarter earnings are any indicator for how the company is going to do in 2017, then it is most certainly time to buy as many shares of PCLN as you can. The company’s third quarter, ended September 30, 2016, showed strong earnings despite many obstacles that threatened to decrease revenue for the travel giant and surpassed analysts’ expectations on many counts. The company posted a non-GAAP EPS of $31.18, while analysts expected earnings per share to stand almost $2 less at $29.32. Priceline showed an impressive year-over-year revenue increase of 19% from $3.10 billion to $3.69 billion, while analysts only projected a 16% increase to $3.62 billion.

As for the fourth quarter of 2016, Priceline expects non-GAAP earnings per share to be somewhere in between $12.20 and $12.80. The company projects the number of room nights booked to increase by 20-25% and total gross travel bookings to increase by 16-21%. Following the Q3 earnings report, PCLN ‘skyrocketed’ up from closing at $1424.28 on Friday November 4 to closing at $1480.33 on Monday November 7. The price for a share of PCLN has since increased markedly. The earnings report for Q4 is set to be released on February 23, 2017.

Going Forward with OpenTable

Back in 2014, The Priceline Group acquired an app that enabled making restaurant reservations with the push of a few buttons. Priceline spent $2.6 billion to buy OpenTable, a company that at the time generated under $200 million in annual revenue. Recently, The Priceline Group wrote-down $941 million on its OpenTable investment. In a statement, the company said that “they will do so [conduct operations to grow OpenTable] on a more measured and deliberate basis.” Priceline has sought to expand OpenTable outside of the US, but it has been a costly process that has not been bringing in as much revenue as Priceline had hoped. Priceline still backs its 2014 investment and Priceline’s interim CEO Jeffery Boyd said that “It’s something that’s taken a little bit longer to scale up than we thought it would. If we can execute, I think we’ve got a fabulous opportunity to build a global business.”

Artificial Intelligence

The latest bit of technology to really alter the way that many businesses operate is artificial intelligence. Priceline as well as its main competitor Expedia have been dabbling with AI and exploring how it can best be incorporated into their businesses to increase their bottom line. According to Jeffery Boyd, the team that runs Priceline subsidiary Kayak is looking to expand their travel booking offerings to Facebook Messenger and Amazon’s Echo by using artificial intelligence. Boyd admits that developing the technology is still in its early stage. While R&D costs may be high now and will likely be for the foreseeable future, the usage of artificial intelligence will bring in a lot of revenue to the company in the long run.

CTrump

President-elect Donald Trump could mean bad news for US based travel agencies that benefit from Chinese tourism. Chinese tourism in the US has been on the rise in recent years with the US government expecting an increase in Chinese tourism of 14.4% compounded annually until 2021. However, with Trump’s threats to begin a trade war with China looming, that could mean blows to business for US based travel agencies such as Priceline and Expedia. However, Priceline has the upper hand over Expedia and other similar agencies. Back in 2012, Priceline entered a partnership with a main Chinese bookings company, Ctrip. Even if the Chinese don’t look directly to Priceline.com for their travel needs and go on Ctrip instead, they will stumble on deals that when clicked, the consumer will be directed to one of the Priceline Group’s many websites including priceline.com, booking.com, kayak.com, opentable.com, etc.

Conclusion

Priceline’s year could have been quite rough with the effects of Brexit, fluctuating currencies around the world, fear of international terrorism, but the company has come out on top despite everything working against it. Back in August, I Know First published an article detailing the bullish stock prediction for PCLN for the 1 month, 3 months, and 1 year time frames. At the time that the forecast was generated on August 7, PCLN was trading for roughly $1407. 3 months later on November 8, the stock was trading for about $1578 per share, showing the accuracy with which the algorithm makes its forecasts and the strong returns that are brought to investors.

Source: Google Finance

I Know First maintains its bullish stance on PCLN and is confident that the company will continue to bring in strong returns to investors throughout 2017. Below is the algorithm’s outlook for PCLN for the 1 month, 3 month, and 1 year time periods.

I Know First’s algorithm forecasts how stocks are going to perform for 3 days, 7 days, 14 days, 1 month, 3 months, and a year. In the case of Priceline (PCLN), the middle row represents the signal strength and the bottom number represents the predictability indicator, the historical correlation which is heavily weighted on the algorithm’s recent predictions. To learn more about how I Know First’s algorithm operates, click here.