Priceline.com reports earnings tonight after the bell.
Here’s what to look for, via JPMorgan analyst Imran Khan:
- “We are modelling 3Q int’l gross bookings growth of 50% Y/Y (61% ex FX). This is versus guidance calling for 46%-51% Y/Y growth at an FX rate of $1.32. We note that Expedia reported 22% Y/Y ex-FX growth. In the first half of 2010, Priceline’s local currency int’l gross bookings growth has outperformed Expedia’s local currency growth at an average of 3910 bps. Using this average would imply Priceline to grow 61.1% Y/Y ex-FX vs. our 61% growth estimate.”
- “We think our margin expectations could be conservative. We are modelling 3Q pro forma operating margins to increase 370 bps Y/Y vs. the last 2 quarter average growth of 426 bps. On a per cent of gross profit basis, this implies operating expenses (ex-cost of rev) to fall 260 bps Y/Y, which could be conservative given the 310 bp decline in 2Q.”
- “We feel that 4Q guidance will come in higher than our est’s. We think 4Q guidance may be stronger than our estimates given continued stabilisation of the Euro, recovering ADRs, and easing air capacity. As a result, we feel that there could be upside to our modelled $1.32 Euro FX rate, 2% ADR growth, and 28% Y/Y gross bookings growth (a deceleration from our 3Q est. of 37%). Furthermore, we note the possibility of an announcement regarding a tax benefit for innovative activities in the Netherlands, which would now be taxed at 5%.”
- “Outlook for 3Q’10. We are modelling 3Q gross bookings growth of 37% Y/Y, revenue of $963M, EBITDA of $338M, and pro forma EPS of $4.99. Consensus revenue, EBITDA and EPS estimates are $974M, $336M, and $4.97.”
- “Outlook for 4Q’10. Our current model calls for gross bookings growth of 28%, and revenue, EBITDA, and EPS of $699M, $176M, and $2.51, vs. consensus of $691M, $182M, and $2.68. We note that we are currently modelling an FX rate of $1.32 vs. the current rate of ~$1.41. We think any EPS guidance above $2.75 will be perceived positively by the Street. We do not expect 2011 guidance to be provided.”