Priceline Shares Drop on Below Expectation Forecast

Priceline Group Inc. shares fell sharply after the company released an outlook below analysts' expectations, as the online travel agent begins its search for a new chief executive a week after its former head resigned.

Former Chief Executive Darren Huston resigned last week after an internal investigation found that his relationship with an employee violated the company's code of conduct. The company said Mr. Huston won't receive any severance payments and agreed to forfeit more than $13 million in equity awards.

Priceline said it expects adjusted earnings per share for the second quarter to be between $11.60 and $12.50, well below the $14.98 that analysts polled by Thomson Reuters were predicting. It also said it expects revenue growth of between 7% and 14%, below the Wall Street expectation of 16%.

Shares plummeted 12.9% to $1180.05 in premarket trading.

Still, the company, which also operates Booking.com and Kayak.com, posted double-digit revenue and profit increases in the first quarter. Results beat expectations.

Priceline, based in Norwalk, Conn., has historically relied on booking commissions for growth. That segment—which represents 70% of revenue—increased 25% to $1.5 billion.

In all for the period, Priceline reported a profit of $374.4 million, or $7.54 a share, up from $333.3 million, or $6.42 a share, a year prior. Excluding certain items, earnings per share rose to $10.54 from $8.12.

Revenue rose 17% to $2.15 billion. Analysts polled by Thomson Reuters had expected earnings per share of $9.65 on revenue of $2.12 billion.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

May 04, 2016 08:35 ET (12:35 GMT)

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