Wednesday, Credit Suisse downgraded Priceline.com Inc. (PCLN) shares to Neutral from Outperform with a price target of $210.
Analyst Barry noted that while compelling multi-year growth story intact, diminished visibility owing to uncertain magnitude/sustainability of cyclical and secular puts/takes at work in 2009, inherent category volatility and dialed-up expectations temper our enthusiasm for the stock at current levels.
The analyst struggle with visibility on 2010 growth trajectory owing to uncertainty surrounding the impact/sustainability of multiple puts and takes contributing to a strong re-acceleration in unit volumes and outsized incremental profitability in 2009.
The analyst said that consistent with management commentary and the trend prior to macro collapse, unit volume growth likely to moderate in 2010 with hotel room night growth expected to decelerate from current 50%+ peak to a still-strong mid-20% pace in 2010.
The analyst noted that sustainability of historical-high mid-50% incremental EBITDA profitability vs. mid-40% prior likely requires continued strong repeat frequency and tail on rational marketing spending backdrop. Bullish sentiment, upward revisions and historical-high multiple suggest model's power much more widely appreciated and track record of consistent overperformance likely needs to continue.
The analyst fully recognizes forecast growth is still strong and sources of uncertainty could break to the upside. Financial performance since the 2004 Booking.com BV acquisition has also been consistently, and often shockingly, ahead of expectations.
Currently, PCLN is down $6.70 or 3.28% and trading at $197.52.
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