Goldman Sachs Suggests Buying Call Spreads on Priceline.com (PCLN)

Goldman Sachs is out with a research note this morning, where it suggests that traders buy 1x2 call spreads on Priceline.com Incorporated PCLN ahead of earnings. Goldman Sachs Internet analyst, Ingrid Chung, rates PCLN Buy and sees 14% upside to her 6 month price target of $600. She expects PCLN to deliver better-than-expected gross bookings and revenue vs. her estimates of $4.47 bn (+51% yoy) and $785 mn (+34% yoy) for 1Q, largely driven by continued strength in Europe and Asia. She notes that PCLN is facing easier comps in 2Q and expects good 2Q guidance given: (a) the Icelandic volcano in 2Q2010, and (b) European debt crisis slowed momentum in this region last year. Goldman Sachs suggests buying the June $525/590 1x2 call spread for $16.05. Priceline.com Incorporated is a global online travel company that offers its customers a range of travel services, including the opportunity to purchase hotel room reservations, car rentals, airline tickets, vacation packages, cruises and destination services in a price-disclosed manner.