The Priceline Group received a key upgrade from analysts at Barclays this morning. They moved from Equal Weight to Overweight and raised their price target 15% from $1,300 to $1,500 per share, saying that there isn’t much priced into the current valuation. Analysts at Piper Jaffray issued a positive report on the online travel firm on Tuesday, while Cantor Fitzgerald issued a positive report on it last week.

Priceline Group

Barclays raises earnings estimates for Priceline

Barclays analyst Christopher Merwin said he has been expecting Priceline to enjoy long-term structural growth in what’s a “compelling end market,” and he also likes the company’s strong execution track record. Despite these positives, he thinks investors are pricing in a “fairly bearish scenario of falling take rates and margin de-leverage” and that the near-term concerns create a buying opportunity for investors.

He added that the disappointing second quarter outlook only amplified the bearish sentiment, but he thinks the reasons for the weak outlook were mostly related to timing and thus don’t impact his long-term view of the company. Management had warned that sporting events and the timing of Ramadan could be headwinds for summer travel, but Merwin believes this will simply shift demand into late in the second quarter and early in the first quarter, resulting in a net neutral impact for the year.

He believes take rates are finally stabilizing as the transition to the agency model is almost finished, and he expects margins to improve as time goes on and ad spend moves toward channels with higher returns on investment, just as it has on Facebook. He estimates that Priceline spends more than 80% of its marketing dollars on Google where return on investment has started to decline, but he expects the company to gradually shift this spend over to Facebook and other channels with better return on investment.

Is Priceline’s new CEO too conservative?

Piper Jaffray analyst Michael Olson is also bullish but with a slightly different take on the issues facing Priceline as he believes the recent CEO change is driving guidance that’s too conservative. He noted that in the past, the company has guided overly conservatively during times of macroeconomic issues and internal shifts like getting a new CEO. He explained that in 27 of the last 30 quarters, the company beat pre-guidance bookings growth consensus. Additionally, in three of the five quarters in which it guided the high end of bookings growth below the consensus, it outperformed.

Olson already had an Overweight rating and $1,500 per share price target, both of which he maintained in his June 21 report. As a result, he sees a favorable risk/ reward in owning the online travel firm’s stocks as the “over-conservative” stands “against a backdrop of stable global travel trends.”

The analyst expects margin expansion in the second half of this year because he sees the outlook for 575 basis points of margin compression as being too conservative “and almost definitely not something to extrapolate throughout the year.”

Positive checks for Priceline

Last week Cantor Fitzgerald analyst Naved Khan and team said last week that their intra-quarter checks for the second quarter were positive. They have a Buy rating and $1,525 price target on Priceline.

They said that although growth in travel demand eased in April and May compared to first quarter levels, the second quarter room nights growth and bookings seem to be heading toward the high end of management’s guidance. They said room rates increased 2.8% in Europe on a currency-neutral basis, while occupancy increased 1.4%. Additionally, they report that worldwide searches for Booking.com were ahead of expectations, rising 100 basis points in the U.K. and Germany and 800 basis points in the U.S. but declined 900 basis points in France.

Based on search trends for Booking.com, Priceline itself, and Agoda plus mobile booking growth, they believe the company is at the upper end of guidance for 22% growth in room nights and 18% in bookings.

Shares of The Priceline Group climbed 1.43% to $1,362.24 in afternoon trading on Wednesday.