Priceline.com Inc (NASDAQ: PCLN) and Expedia Inc (NASDAQ:EXPE) are online travel companies, which allow their customers to find the best vacation deals all in one spot. However, while the companies provide similar services, their stocks have seen polar-opposite price action this year. More specifically, PCLN has been on a technical tear since the beginning of 2013, while EXPE suffered a huge blow following its second-quarter earnings report in late July. With both PCLN and EXPE slated to report third-quarter earnings at the end of October, let's discuss the stocks' performances on the charts, and the surrounding sentiment that may impact future price action, from a contrarian point of view.
On a year-over-year basis, PCLN has outperformed EXPE by roughly 79 percentage points, as the former has climbed roughly 60% to trade at $993.12, and the latter has fallen about 19% to perch at $49.65. More recently, PCLN scored a post-earnings boost in early August, bringing its three-month gain to 10.8%. Meanwhile, EXPE plummeted 26.2% just one hour into the session following its July 25 earnings release, and has since failed to fill this bearish gap. Over the past month, neither company has made any significant moves on the charts, and, both have performed about on par with the broader S&P 500 Index (SPX).
Although PCLN has put forth a much stronger performance on the charts, the stock remains a favorite among put players. In fact, the equity's 50-day put/call volume ratio of 1.06 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 93rd percentile of its annual range, indicating puts have been bought to open over calls at a near-annual-high clip in recent months.
By contrast, EXPE has been enjoying the bullish limelight. The equity's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.52 ranks higher than 80% of other such readings taken over the last year, conveying long calls have been initiated over long puts at an accelerated pace during the past 10 weeks. While an unwinding of bearish bets on PCLN could provide a boost in the near term, EXPE could see its shares pushed further south, as its bullish bets dwindle down.
Outside the options pits, the brokerage bunch maintains a more favorable outlook toward PCLN, which has received 16 "buy" or better endorsements, compared to just one "hold" and not a single "sell" or worse suggestion. Likewise, the average 12-month price target of $1,108.15 represents expected upside of 11.7% from PCLN's current perch. Meanwhile, EXPE sports 11 "hold" ratings, and just six "strong buy" recommendations -- yet the consensus 12-month price target of $61.32 represents a lofty 22.8% premium to EXPE's current price. In other words, should EXPE continue to struggle, a round of price-target cuts could be in store, which could cause the security to sink lower.
Finally, both EXPE and PCLN's short interest grew in the latest reporting period. In fact, EXPE's swelled by 15%, and now accounts for 11.6% of the stock's available float. Furthermore, PCLN's short interest increased by 3.3%, bringing the total number of shares sold short to 2.7 million, which would take almost six sessions to cover at the equity's average pace of trading. This means that PCLN could end up benefiting from a short-squeeze scenario, should the bears capitulate in the face of the security's upward momentum. On the other hand, a continued slide by EXPE could attract more shorts, and the resulting selling pressure may worsen the equity's technical troubles.
In summary, Priceline.com Inc (NASDAQ: PCLN) and Expedia Inc (NASDAQ:EXPE) have taken different routes on the charts, and both have received mixed responses in return. What is important to note is that both stocks have enough contrarian fuel to send them further on their respective ways. Also of note, the results of each companies' earnings reports at the end of October could also significantly impact their price action, as it has done in the past.
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