Priceline.com (NASDAQ: PCLN) is an online travel agency. It offers a range of services, including airline tickets, hotel rooms, car rentals, vacation packages and cruises, as well as destination and travel insurance services. The company operates a Name Your Own Price system, which allows users to make offers for travel services at prices they set. It also markets fixed-price travel products and offers various online financial services. Expedia (NASDAQ: EXPE) is a major competitor.
The firm pleased investors last week, when it reported Q1 EPS of 76 cents and revenues of $403.20 million. Analysts had been expecting 60 cents and $377.17 million. Gross travel bookings increased 76% yr/yr, a result above company guidance of 60-65%. Pro forma gross profit rose 74.7% yr/yr, versus guidance of 55-60%. Management predicted FY08 EPS of $5.25-$5.65 ($5.12 consensus).
Expedia Inc. (NASDAQ: EXPE) shares are trading relatively flat today even though an analyst at Thomas Weisel Partners said in a note to investors that online travel sites like EXPE and Orbitz (NYSE: OWW) have quietly boosted booking fees for flights on major airlines, which is likely to improve margins at the online travel companies. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on EXPE.
After hitting a one-year high of $35.28 in October, the stock hit a one-year low of $20.18 in March. EXPE opened this morning at $24.85. So far today the stock has hit a low of $24.85 and a high of $25.38. As of 12:15, EXPE is trading at $25.17, up 0.04 (0.2%). The chart for EXPE looks neutral and improving, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $20 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just three and a half months as long as EXPE is above $20 at July expiration. Expedia would have to fall by more than 20% before we would start to lose money. Learn more about this type of trade here.
EXPE hasn't been below at all in the past year and has shown support around $21 recently. This trade could be risky if the company's earnings (due out in early May) disappoint, but even if that happens, that position could be protected by support the stock might find just above $20, where it bottomed out a few weeks ago.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in EXPE or OWW.
priceline.com Inc. (NASDAQ: PCLN) shares are trading higher after the company announced on Friday that it has agreed to a one-year partnership with Chinese classified information search engine Kooxoo.com. Under the deal, PCLN will gain data access to over 8,000 hotels in China, which could give it a leg up in international bookings over competitors Expedia (NASDAQ: EXPE) and Orbitz (NYSE: OWW). If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on PCLN.
After hitting a one-year low of $52.00 last March, the stock hit a one-year high of $129.24 in February. PCLN opened this morning at $119.48. So far today the stock has hit a low of $119.04 and a high of $128.75. As of 12:30, PCLN is trading at $127.87, up $9.24 (7.8%). The chart for PCLN looks bullish and steady, while S&P gives the stock its lowest 1 Star (out of 5) strong sell rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $70 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 6.4% return in just four months as long as PCLN is above $70 at July expiration. Priceline would have to fall by more than 46% before we would start to lose money.
PCLN hasn't been below $70 since August and has shown support around $110 recently. This trade could be risky if the US economy gets even weaker in the coming months, but even if that happens, this position could be protected by the support the stock might find just above $90 from its 200 day moving average.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in PCLN, EXPE, or OWW.
Priceline.com (NASDAQ: PCLN) is an online travel agency. It offers a range of services, including airline tickets, hotel rooms, car rentals, vacation packages and cruises, as well as destination and travel insurance services. The company operates a Name Your Own Price system, which allows users to make offers for travel services at prices they set. It also markets fixed-price travel products and offers various online financial services. Expedia (NASDAQ: EXPE) is a major competitor.
The firm pleased investors earlier in the month, when it reported Q4 EPS of 96 cents and revenues of $334.9 million. Analysts had been expecting 84 cents and $329.3 million. In discussing the solid quarter, the CEO emphasized continued momentum in growth of gross bookings. International growth accelerated to 113% year over year and the domestic growth rate increased 24% sequentially. Management also guided Q1 EPS to 50-60 cents (53 cent consensus) and FY08 EPS to $4.80-$5.10 ($4.90 consensus).
MOST NOTEWORTHY: General Motors, Ford, Deutsche Bank and Credit Suisse were today's noteworthy downgrades:
Bear downgraded General Motors Corporation (NYSE: GM) to Underperform from Peer Perform and Ford Motor Company (NYSE: F) to Peer Perform from Outperform citing deterioration in the automotive consumer's ability to purchase vehicles.
ABN Amro downgrade Deutsche Bank AG (NYSE: DB) to Sell from Hold and Credit Suisse Group (NYSE: CS) to Hold from Buy on concerns of slowing revenue growth amid the subprime crisis.
OTHER DOWNGRADES:
FormFactor Inc (NASDAQ: FORM) was lowered to Neutral from Buy at Broadpoint.
MOST NOTEWORTHY: Thornburg Mortgage, Expedia and Perot Systems were today's noteworthy upgrades:
Jefferies upgraded shares of Thornburg Mortgage Inc Corp (NYSE: TMA) to Buy from Hold as they believe the stock is at an inflection point, characterized by accelerated earnings and dividend growth.
Expedia Inc (NASDAQ: EXPE) was upgraded to Outperform from Neutral at Credit Suisse, as they believe the company is well-positioned to benefit from global e-travel and media opportunities, strong free cash flow, and attractive valuation.
Perot Systems Corporation (NYSE: PER) was upgraded to Sector Perform from Underperform at RBC Capital following its Q4 report.
Experience has taught me that catching falling knives in the stock market is incredibly dangerous, but some of these speculative names are really beginning to test my resolve. So I thought I'd share them with you.
Investors have been punishing these plays not because business has fallen off a cliff, but because they are some of the most speculative stocks around -- other than penny stocks -- and in this kind of market environment, investors prefer safety. That creates opportunity, if you're willing to take on some risk. After all, these companies still have solid business fundamentals, so there will be a bottom somewhere, and I think we're getting very close to it here. For now, put these on your watchlist, for when they do bounce, they're going to bounce hard, think 15-20% within days.
Garmin (NASDAQ: GRMN) -- At $64, this navigation system maker is down 35% on the year, but revenue growth is far greater than its current P/E of 15. Sure, there's some margin concerns, but the chart has solid support at $60.
CEO of the Year Coming into his own in his third year at the helm of McDonald's, Jim Skinner has made a deep impression. The evidence is on the bottom line, on the menu and on employees' lapels. Other finalists for CEO of year are Indra Nooyi of PepsiCo, Jeff Bezos of Amazon, Michael Ahearn of First Solar and Terri Lanai of MGM Mirage. CEO of the Year 2007 - MarketWatch Also: Worst CEO of Year Is Sears' Eddie Lampert
5 Stock Surprises of 2007 These companies should see continuing 2008 growth despite market and economic woes. They are Coca-Cola, Costco, Expedia, Eaton Vance and Chicago Bridge & Iron. Five Stock Surprises for 2007 - Kiplinger.com
New Rate Freeze May Help Borrowers Bear ARMs If you're a homeowner sitting with an adjustable rate mortgage that is about to reset to a much higher rate, what should you do? For now, wait to see what help the government will bring. Homeowners may benefit from relief plan - Bankrate.com
PeopleSupport (NASDAQ: PSPT) provides business process outsourcing services from facilities in the Philippines. Company personnel handle customer service calls, technical support questions, marketing campaigns and collections. The firm also transcribes voice recordings and captions television content. Services are offered via telephone, e-mail and Web chat. Expedia (NASDAQ: EXPE) and Vonage Holdings (NYSE: VG) are major customers.
The firm surprised the Street earlier in the month, when it reported Q3 EPS of 27 cents and revenues of $36.9 million. Analysts had been expecting 6 cents and $34.7 million. Management also guided Q4 EPS to 28-29 cents (4 cent consensus), Q4 revenues to $35.7-$36.5 million ($34.8M consensus), FY07 EPS to 84-85 cents (42 cent consensus) and FY07 revenues to $140.6-$141.4 million ($137.5M consensus). The stock popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
On Facebook, you're as private as you are modest. You have the option of laying bare your bookshelf, Netflix (NASDAQ: NFLX) queue and purse contents for all your friends and neighbors to pan through, or you can leave all that business blank and keep your fancies as mysterious and enigmatic as you are, you unique snowflake. My profile tells users -- not to mention advertisers -- that I like to put on CNBC and dust my marriage-prohibitive record collection. Consequently, I've got E*Trade (NASDAQ: ETFC) and the occasional ironic t-shirt vendor after me, greeting me with animated ads whenever I log in.
By now, web users have learned to deal with e-tailers and ad-serving scripts tracking their behavior, realizing that oft-maligned cookies effectively just save you the effort of typing your password. This is reasonable targeted marketing: I pay nothing for a service, and in exchange, some vendor imagines it got a little closer to a selling me something.
Where Facebook and all the participating advertisers that sail with her cross the icky line is with Beacon. Beacon goes beyond serving up targeted ads -- it takes my purchase information from participating advertisers and broadcasts it endorsement-style to all my Facebook friends, as well as any others in my network who, for whatever illness or boredom, feel like probing my Facebook essence.
Internet tycoon Barry Diller, who is splitting up his IAC/InteractiveCorp (NASDAQ: IACI) conglomerate, has been adding to his position in Expedia Inc. (NASDAQ: EXPE), the Internet travel site where he's also chairman.
According to Reuters, Diller exercised options to buy 9.5 million shares at $8.59, giving him a 27.7% stake in the company. Judging from the company's recent performance, he may be onto something.
Net income soared 69% to $99.6 million, or 32 cents per share, compared with $59 million, or 34 cents a year earlier, the Bellevue, Washington-based company said today. Revenue rose 24% to $759.6 million. When one-time items are excluded, Expedia said its earnings were 39 cents, beating the 37 cents expected by analysts surveyed by Reuters.
"Expedia succeeded on almost every financial metric during the third quarter," crowed an ecstatic Diller in the earnings release. "These are good results, and our ability to keep them coming depends on the right balance of investment and profitable growth -- and I think we've shown our ability to be in proper cadence with those levers throughout this year."
Though the results were impressive, I am still have my doubts about the online travel business because it's so price competitive. But investors clearly aren't as pessimistic as I am since Expedia shares are up more than 43% this year.
Ever since Barry Diller cobbled together the internet Frankenstein called IAC/InterActiveCorp. (NASDAQ: IACI), he had been assuring investors that somehow it all made sense to group together TicketMaster with Evite with Ask.com. Wall Street cried confusion.
Then the media mogul spun off his Expedia travel business into a separate company, figuring that was the reason why investors were confused by the ungainly IAC. Judging from the stock price, investors were just as confused as ever, even as IAC said it was "proud to have so many great brands under one roof." Now, Diller has thrown in the towel and is splitting up IAC into five separate publicly traded companies. As envisioned, IAC would be more or less a media and entertainment company, maintaining businesses including Ask.com, Citysearch, Evite, CollegeHumor and Bloglines. The other companies would be centered around HSN, TicketMaster, and Interval International.
Diller seems to have gotten the message from Wall Street, albeit about five years too late.
"We've been a complex enterprise almost from the very beginning 12 years ago, with hundreds of transactions over those years," he said. "And while we've created a lot of value, I've always believed our complexity and many mouthfuls of sentences to explain who we are and what our strategy is have hampered clarity and understanding with all our constituencies, particularly investors."
As business has discovered, successful methods of advertising on the Internet are constantly changing and keeping up requires expert help. There is an outfit in Reston, Virginia that stays abreast of the latest trends by constantly surveying a very large group of online consumers.
comScore (NASDAQ: SCOR) quantifies behavior in the digital world, on the basis of responses from a global cross-section of more than two million consumers. These panelists have given comScore permission to confidentially capture their browsing and transaction behavior. They also participate in survey research that captures and integrates their attitudes and intentions. Company analysts use the information so obtained to help corporate customers enhance their marketing initiatives. comScore serves more than 700 clients, including Best Buy (NYSE: BBY), Merck (NYSE: MRK) and Expedia (NASDAQ: EXPE).
The firm pleased investors earlier in the week, when it issued upside guidance for Q3 results. Management now sees EPS of 15-17 cents and revenues of $22.1-22.5 million. On average, analysts had been looking for 12 cents and $21.89 million. The company expects adjusted EBITDA to be in the range of $4.2-4.6 million, compared to previous guidance of $3.4-3.5 million.
More and more businesses are finding that it can pay to outsource their telephone and Internet customer interface requirements to firms set up to efficiently handle such functions. One such outfit is headquartered in Los Angeles, but operates from shops overseas.
PeopleSupport (NASDAQ: PSPT) provides business process outsourcing (BPO) services from facilities in the Philippines. Company personnel handle customer service calls, technical support questions, marketing campaigns and collections. The firm also transcribes voice recordings and captions television content. Services are offered via telephone, e-mail and Web chat. Expedia (NASDAQ: EXPE) and Vonage Holdings (NYSE: VG) are major customers.
The firm surprised the Street earlier in the month, when it reported Q2 EPS of 16 cents and revenues of $34.3 million. Analysts had been expecting 2 cents and $31.6 million. The CEO cited increasing demand and improved operational efficiencies for the solid results. Management also issued in-line guidance for Q3/FY07 results and announced a $25 million stock buyback. Piper Jaffray subsequently upgraded the shares to "outperform" and four other brokerage firms reiterated "buys."
The establishment of online travel sites finally allowed consumers the luxury of being able to compare available services. The outfit that really set the pace, though, was the one that also let folks haggle over the price.
Priceline.com (NASDAQ: PCLN) is an online travel agency. It offers a range of services, including airline tickets, hotel rooms, car rentals, vacation packages and cruises, as well as destination and travel insurance services. The company operates a Name Your Own Price system, which allows users to make offers for travel services at prices they set. It also markets fixed-price travel products and offers various online financial services. Expedia (NASDAQ: EXPE) is a major competitor.
The firm pleased investors earlier in the month, when it reported Q2 EPS of $1.11 and revenues of $355.9 million. Analysts had been expecting 90 cents and $354.2 million. In discussing the solid quarter, the CEO emphasized a 93% gross bookings growth rate at the firm's Booking.com hotel reservation service. Management also guided Q3 EPS to $1.21-1.31 ($1.07 consensus), FY07 EPS to $3.50-3.65 ($3.10 consensus) and Y07 gross travel bookings to $4.50-4.65 billion ($4.10-4.25B previous estimate). Susquehanna Financial, Stifel Nicolaus and Banc of America Securities subsequently declared the stock a "buy."
an online travel agency. It offers a range of services, including airline tickets, hotel rooms, car rentals, vacation packages and cruises, as well as destination and travel insurance services. The company operates a Name Your Own Price system, which allows users to make offers for travel services at prices they set. It also markets fixed-price travel products and offers various online financial services. Expedia (NASDAQ: EXPE) is a major competitor.
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PeopleSupport
had been expecting 6 cents and $34.7 million. Management also guided Q4 EPS to 28-29 cents (4 cent consensus), Q4 revenues to $35.7-$36.5 million ($34.8M consensus), FY07 EPS to 84-85 cents (42 cent consensus) and FY07 revenues to $140.6-$141.4 million ($137.5M consensus). The stock popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Ever since Barry Diller cobbled together the internet Frankenstein called
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