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Upgrade Growth Play: Priceline Group Inc (NASDAQ:PCLN)
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The Priceline Group Inc. (NASDAQ:PCLN) was upgraded yesterday by analysts at Stifel from hold to buy. They also raised their 12 month price target on the stock to $1400. This is quite a bold move. However, as our analysis shows, the stock appears fairly priced at present, so it may present itself a good growth buy for investors who believe PCLN can beat growth expectations. [Trend Analysis]
The Priceline Group Inc. (NASDAQ:PCLN) last traded at $1164.15 after moving up 1.25% for the trading day.
PCLN is trading with a trailing 12 month P/E multiple of 25.47 and an estimated forward P/E multiple of 17.19. The stock has an estimated 5 year annual growth of 19.59% and a PEG multiple of 1.30.
From a value investor perspective, as mentioned The Priceline Group Inc. trades on an estimated forward P/E multiple of 17.19. The current estimated forward P/E ratio for the market as a whole is approximately 19.00. Therefore, for value investors PCLN appears to be underpriced.
For growth investors, who are more interested in growth into the longer term for the stock, we look at the PEG multiple (P/E to growth) of The Priceline Group Inc. (NASDAQ:PCLN). This PEG multiple takes into account the expected long term growth in earnings of The Priceline Group Inc. rather than merely the growth for one full earnings period ahead.
As a rule of thumb, growth investors often believe a stock with a PEG of between 0 and 1 is considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of PCLN being 1.30, we consider The Priceline Group Inc. to likely be priced at fair value.
The mean analyst 12 month target price for The Priceline Group Inc. (NASDAQ:PCLN) is currently $1364.00 or 17.17% above the current price. Additionally, the stock has been as high as $1329.90 and as low as $990.69 in the last 52 weeks. Analysts are estimating that PCLN will report earnings per share of $13.23 next quarter.
