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Priceline.com Earnings Easily Outpace Expectations

Priceline.com reported fourth-quarter results above analysts' expectations, sending shares of the Internet-based travel agency to a new five-year high.

Fourth-quarter sales were driven by strength in U.S. and European markets, the company said in a statement late Monday.

"While Europe continues to beat revenue guidance, strength in the U.S. market was bigger surprise and was likely aided by higher prices for travel products, which is making Priceline's opaque model more attractive for consumers and travel providers," Merrill Lynch analyst Justin Post said in a note on Tuesday.

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The Norwalk, Conn.-based company posted earnings of 58 cents a share on sales of $260 million, compared with analysts' consensus forecast of 41 cents in earnings on sales of $236 million. On a GAAP basis, Priceline reported earnings of 33 cents a share, compared with earnings of 9 cents a share in the year-ago quarter.

Goldman Sachs analyst Anthony Noto said in a research report Tuesday morning that Priceline's sales resurgence for its U.S. businesses should remain strong in the first quarter of 2007.

"Priceline remains one of our favorite small cap companies, with 15% upside to our 12-month price target of $55," Noto added.

Looking ahead, Priceline predicted a profit of 22 cents to 30 cents a share for the first quarter, which tracks below the consensus estimate of 30 cents a share. For the full year, the company said it expects earnings in a range of $2.60 to $2.90 a share, above analysts' consensus estimate of $2.54.

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