Investors should buy Priceline as profit margins improve on more efficient ad spending, according to Barclays, which upgraded the shares of the online travel company to overweight from equal weight.
"We believe take rates are stabilizing as the shift to the agency model is mostly complete, while we think margins will improve (in the long-term) as Priceline begins to shift ad spend to higher ROI channels, like Facebook," Barclays' Christopher Merwin wrote in a note to clients Wednesday.
He added, "After a recent run-up in valuations across our coverage, PCLN still stands out to us as an inexpensive name relative to structural trends and expected growth. We believe there is a valuation disconnect from concerns that are either timing-related or mostly played out."
