Priceline.com shares skid as volcanic ash clouds 2Q financial forecast

Priceline.com shares drop on weak 2Q forecast

NEW YORK — Shares of travel Web site operator Priceline.com Inc. tumbled on Tuesday, with its second-quarter financial forecast clouded by the recent volcanic eruption in Iceland.

The stock dropped $40, or 16 percent, to $209.75 in morning trading. Shares have traded between $98 and $273.93 over the past year.

The volcano caused major disruptions in air European air travel. On top of that, Priceline said civil unrest in Thailand and concerns over debt-burdened European countries could also crimp results for the three months ending in June.

After the closing bell Monday, the company forecast earnings of $2.50 to $2.70 per share for the quarter excluding items. Analysts were expecting $2.83 per share.

Citi Investment Research analyst Mark Mahaney said investors should take advantage of the dip in price to buy Priceline shares.

In a client note Tuesday, he said Priceline is gaining market share and has “probably the industry’s lowest commission rates” for hotel operators, an important competitive advantage.

Key Banc analyst Scott Hamann kept a “Hold” rating on the stock.

In a note to investors, he said Priceline has “set the bar high for so many quarters now that investor expectations had gotten a bit frothy,” but the company’s results “still reflect solid fundamentals.”