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Priceline in a ‘Good Spot Long-Term’: Pro

Jane Burnett|Special for CNBC.com
Thursday, 9 Aug 2012 | 4:48 PM ET
Priceline
Scott Eells | Bloomberg | Getty Images
Priceline

Although Priceline’s outlook disappointed Wall Street on Tuesday, one analyst still has an “overweight” rating onthe stock and said the company is in a “good spot long-term,” despite weakness in Europe.

In an interview with CNBC’s“Squawk on the Street,” Michael Olson, senior research analyst and managing director at Piper Jaffray, commented on the online travel company’s weaker-than-expected outlook for its third quarter.

“I do think it’s likely overly conservative,” he said. “This is a management team that’s been notorious for being conservative in the past. I think they’re not thrilled with the fact that the second-quarter numbers didn’t come in ahead of what they were expecting.”

Europe’s macro environment does seem to be catching up with Priceline , Olson said.

Priceline's Disappointing Outlook
Shares of Priceline.com fall after the company announces a disappointing outlook, citing economic woes in Europe. Michael Olson, senior research analyst & managing director at Piper Jaffray, discusses his forecast for the company and how Priceline stacks up against Expedia.

Conversely, travel services competitor Expedia posted numbers that Olson said “looked really strong.” In its latest earnings report, the company topped analysts’ earnings and revenue expectations.

Priceline is not the only travel services company to disappoint Wall Street recently. On Wednesday, Orbitz Worldwide reported earnings that did not meet analysts’ forecasts.

This is a “sign that Priceline is not alone here,” Olson said.

But despite weakness in Europe, Olson still has a 12-month price target of $675 on Priceline’s stock.

“Even with a material reduction in our expectations around international and Europe specifically, they’re still outpacing the growth of any of their closest competitors by two to one,” Olson said.

—By Jane Burnett, Special to CNBC.com

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Disclosures:

Michael Olson does not own Priceline. Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

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