Priceline.com Inc. (NASDAQ: PCLN) is rising into 2013 after having seen its shares pull back handily from highs in 2012. The culprit on Thursday is an upgrade from Bank of America/Merrill Lynch. The firm raised its rating to Buy from Neutral. Priceline’s price target was also raised to $770 from $690 by the firm.

BofA raised the earnings estimates from $38.40 EPS in 2013 and $44.68 in 2014 up to a higher earnings projection: $38.67 in 2013 and $45.47 in 2014. The upgrade was based upon excitement for the Kayak deal and the following:

• 1) We see more near-term upside potential to 2013 estimates than Expedia Inc. (NASDAQ: EXPE)
• 2) our updated international market segment analysis suggests still-strong growth over next three years, even with Europe decelerating and
• 3) a strong play on BofA Merrill Lynch’s expectation for a modest second half Europe recovery.

The research report also noted “somewhat stable hotel occupancy trends through November” and it said that the $/Euro has increased. BofA even noted that the Booking.com hotels are up 7% quarter over quarter versus its own 6% estimate.

If BofA is right, then Priceline could be headed back to its 52-week highs all over again. The $770 price target compares to a 52-week range of $469.28 to $774.96. Analysts in the Thomson Reuters system have a consensus price target of about $750 and the highest registered analyst price target is $838 on the stock. So BofA is calling for Priceline to challenge its 2012 highs. That is a tad more bullish than the consensus group but not by much.

Priceline shares are trading up 2.6% at $655 today. With a market cap of $32.6 billion, Priceline remains more valuable than most of the airlines combined.

JON C. OGG

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