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Sector Snap: Online Travel

NEW YORK -- Shares of online travel companies soared Friday after both Priceline.com and TripAdvisor reported better-than-expected quarterly results.

Priceline.com Inc.'s profit jumped 27 percent as customers made more travel bookings on its website. TripAdvisor Inc.'s net income rose 9 percent, boosted by higher advertising and subscription revenue.

TripAdvisor offers reviews of hotels, restaurants and vacation spots, and then directs travelers to other sites to book.

Executives at both companies suggested that earnings should hold up in the near future despite continued concerns about economic growth across the world, especially in Europe.

Susquehanna Financial Group analyst Herman Leung said Priceline.com's third-quarter results show that it's "back on track" and that its European business is stabilizing. He kept his "Positive" rating on the company and boosted his share price target by $30 to $750.

Leung was less enthusiastic about TripAdvisor, maintaining both a "Neutral" rating and $36 price target for the stock. He noted that while the company's growing collection of online content helps it attract online media spending, its fortunes are still strongly tied to those of Priceline.com and Expedia Inc.

Pacific Crest analyst Chad Bartley backed his "Outperform" rating for Priceline.com and raised his price target to $750 from $687. He said that while economic conditions in Europe remain a short-term challenge, Priceline.com is the "best positioned" online travel company for the long term.

Bartley also backed his "Sector Perform" rating for TripAdvisor, saying that while third-quarter results were better-than-expected its prediction of 2012 revenue growth in the high teens implies fourth-quarter revenue slightly below the average of analysts' predictions.

Priceline.com and TripAdvisor's third-quarter results come on the heels of Expedia, the world's largest online travel agency. It reported earnings late last month that also beat Wall Street's expectations. Orbitz Worldwide Inc. is set to report its results for the quarter next week.

TripAdvisor and Priceline.com were among the sector's top gainers in Friday afternoon trading. TripAdvisor shares jumped $5.74, or 19.5 percent, to $35.15 after peaking at $35.95 earlier in the session. Over the past 52 weeks, the company's shares have traded between $23.99 and $47.81.

Priceline.com rose $57.90, or 9.9 percent, to $644, after reaching as high as $657.60. Over the past 52 weeks, that company's shares have traded between $438.76 and $774.96.

Elsewhere in the sector, Orbitz added 14 cents, or 5.7 percent, to $2.61 and Kayak Software Corp. rose $1.23, or 3.6 percent, to $35.65.