For 1Q17, analysts are estimating Priceline’s (PCLN) revenues to grow 13.8% year-over-year (or YoY) to $2.4 billion, lower than the 16.7% YoY growth seen in 1Q16. For fiscal 2017, analysts are estimating revenues to grow 16.0% to $12.5 billion, slightly lower than the 16.5% YoY growth seen in 2016.
Emerging markets are key
Emerging markets such as China, India, and Brazil are expected to be key growth markets for Priceline. The online booking penetration in these markets is extremely low compared to developed markets
Also, rising income levels in these countries could provide additional impetus to travel growth. The Priceline Group (PCLN) appears to be well placed to take advantage of this growth, as it invests in organic growth opportunities in these markets.
Increasing market share
Many analysts believe that Priceline’s further growth could come from increasing market share. For example, Oppenheimer estimates Priceline’s room occupancy for properties already available on its sites to increase from 11% in 2016 to 14% in 2018. This is expected to lead to 20% growth in room nights.
Increasing online penetration
Going forward, more people are expected to book online. The growth in online booking has averaged 3% for each of the last four years. With more people being able to afford travel and with the Internet’s continual growth, we believe there is robust potential in this space.
Investors can gain exposure to Priceline (PCLN) by investing in the PowerShares Dynamic Leisure and Entertainment ETF (PEJ), where PCLN has the highest weight of ~5.7%. However, this ETF has no exposure to other online travel stocks, including Expedia (EXPE), TripAdvisor (TRIP), and Ctrip International (CTRP).