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Priceline Target Price Raised by Morgan Stanley, Rated Up

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The target price of Priceline.com was recently raised by more than 14% to $1,525 from $1,330 by investment firm Morgan Stanley. In addition, Morgan Stanley's analyst Brian Nowak upgraded the stock’s rating to Overweight from Equal-Weight.

Following the upgrade, Priceline share price was up by 0.73% to $1,248.41.

Morgan Stanley Analyst Bullish on Priceline's Bookings, OTA Market

Brian Nowak remains optimistic about Priceline’s bookings’ growth in the near future. The company expects increasing bookings to expand margin growth in the near term. In the last reported first quarter, Priceline’s overall bookings were up 38.6% sequentially and 20.9% year over year, and came in better than guided. Also, gross bookings of $16.7 billion grew 21% from last year, or 26% in constant currency, again better than guided.

Also, the analyst is optimistic about Priceline’s dominance and growth prospects in the strengthening online travel agency (OTA) market. Priceline has been steadily building positions in emerging international markets. The company’s international business continues to do very well while the domestic business is being helped by deals, promos, prudent marketing, partnerships and acquisitions.

The analyst believes that Priceline’s solid portfolio with more than 422,000 vacation rentals, leading hotel selection, user reach advantage and traffic acquisition will help the company to gain market share going forward.

In all, Brian Nowak remains encouraged by the company’s revenue growth, solid financial position with reasonable debt levels, expanding profit margins and good cash flow from operations. The analyst also expects Priceline's adjusted EBITDA to rise in 2016 for the first time in five years.

Bottom Line

Priceline.com is one of the leading online travel companies in the world. The secular growth trend in the online travel booking market, Priceline’s strong position in international markets, growth opportunities in the domestic market, good execution, prudent marketing strategy and strong financial position are among its positives.

Moreover, Priceline belongs in an attractive industry and has a strong international presence, which is particularly positive for business. However, intensifying competition from Expedia (EXPE - Free Report) weaker ADRs, macro headwinds, increasing expenditure on advertising and occupancy tax-related litigation remain as concerns.

Currently, Priceline shares carry a Zacks Rank #4 (Sell).

Stocks to Consider

Safer Internet stocks are Amazon (AMZN - Free Report) and PetMed Express, Inc. , both carrying a Zacks Rank #1 (Strong Buy).

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