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Priceline (PCLN), Another Gap-up?

Published on May 8, 2008

Priceline (PCLN), Another Gap-up?

May 8, 2008

Priceline (PCLN) will announce first quarter results after market close today. Based on my analysis, I am bullishly biased on the stock, albeit the direction of stock movement post results is not as certain as it was in case of Marvel MVL. Hence just like MVL, at OPNewsletter we’ll play it while minimizing the downside or rather remove downside completely by morphing it into another trade post earning results and by buying sometime. If you are on OPN subscriber, pls lookout for my e-mail before market opens.

Priceline guided for an adjusted first-quarter profit of 50 cents to 60 cents per share. Analysts polled by Thomson Financial expect, on average, earnings of 59 cents per share for the period. I personally expect that they will either meet or beat the estimates both on earnings and revenues. My discomfort with “uncertainty” is about the “outlook” and “margins”. In any case, I think probability is high that those will also be positive too.

priceline-before-may-earnings.pngExpedia (EXPE) posted solid results last results and I think the trends will be reflective on Priceline (PCLN) as well. A quick glance on PCLN chart will show that it has been consistently gapping-up, time and time again. Contrarians will think it will not gap-up this time, while contra-contrarian will think, it will. My take on this- If it gaps-up it will try to fill the last high i.e. in the range of $135, if it gaps down, it may be heading to $110. Take your chances on either direction you are comfortable with. A similar low risk/high reward strategy could be used, “Diagonal strategy“, as I shared free for Marvel.

Have fun, profitable trading, OP

Disclaimer : As always, this is not a recommendation. You must do your own DD before making any investment decision. I may own shares time to time of the ideas I mention here.

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