Does Priceline Group Inc (PCLN) Have Room to Run?

Skepticism is building on Priceline Group Inc (NASDAQ:PCLN), despite its strong 52-week return

Jun 17, 2016 at 3:21 PM
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Travel site Priceline Group Inc (NASDAQ:PCLN) has emerged as an interesting bullish target, from a contrarian standpoint. Specifically, the stock has performed well on the charts, yet sentiment on Wall Street is still overwhelmingly bearish, according to Schaeffer's Senior Quantitative Analyst Rocky White. PCLN, for example, boasts a year-over-year lead of over 12% -- and hit a record high of $1,476.52 in early November -- with the stock last seen at $1,317.28. Despite this, analysts and options traders alike have given the stock no respect. 

But before diving into the sentiment picture, let's dig into PCLN's technical backdrop just a bit more. Most notably, a recent bounce off its 320-day moving average sent the shares barreling back above the round $1,300 mark in late May -- a level that has served as both support and resistance since early 2014. This could suggest that strong underfoot support is once again in place with PCLN only 12% from its all-time high. 

Turning to analysts, an initial glance would make it seem that Wall Street has given PCLN the credit it deserves. Specifically, 13 brokerage firms recommend buying the stock, versus six "holds," and one "strong sell." However, the number of "buy" ratings from this bunch has actually decreased by 8.7% in the past 12 months. It would seem further gains could bring along a fresh round of upgrades. 

Short interest has been on the rise, too. Over the past 12 months, the amount of shorted PCLN shares has grown 10% -- and by a whopping 26% in the last two reporting periods alone -- to 1.4 million shares. These bearish bets represent a solid three days' worth of buying power -- ready to prop up the shares, should short sellers call it a day. 

Plus, put open interest outweighs call open interest among options expiring within three months or less. This is according to the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.05, which ranks in the 67th annual percentile. Moreover, there's a chance the expiring June series could be a boon to PCLN, with heavy open interest set to diminish at several overhead call-heavy strikes. 

Fortunately for anyone interested in buying premium on Priceline Group Inc (NASDAQ:PCLN), the stock's short-term options are relatively cheap at the moment. Specifically, PCLN's Schaeffer's Volatility Index (SVI) of 24% sits below 90% of all similar readings from the past year. This means the options market is pricing in historically low volatility expectations at the moment. 

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