Shares of Orbitz Worldwide Inc. and Priceline.com slumped on Wednesday after the online travel agencies said a weakening global economy would hurt their growth.
Priceline.com, with the largest market capitalization in the sector, tumbled 17 percent to $562.32 at the close in New York, for the biggest decline since 2003. Orbitz declined 25 percent to $3.47, the largest drop since March 2009.
Orbitz cut its full-year growth forecast on Wednesday, a day after Priceline said weakness in Europe could hurt results in the current quarter. Shares of Expedia, another rival, fell more than 5 percent.
Daniel Kurnos, an analyst with Benchmark Co., cited near-term pressure for the online travel agencies, whose results reflect the outlook for leisure travel. But he said were still plenty of growth opportunities as they expand to new geographies.
Online travel companies "are going to experience increasing or incremental weakness for at least the next quarter if not into the fourth quarter," Kurnos said.
Orbitz, which also owns the CheapTickets and ebookers travel sites, said its revised outlook reflects worse conditions in Europe, weaker online air travel demand and foreign-exchange challenges.
Priceline.com, which owes much of its success to international bookings on its European travel site Booking.com, said on Tuesday it expected Europe could deteriorate.
Stifel Nicolaus cut its rating on Priceline.com, long a star in the online travel sector and a favorite among investors, to "hold" from "buy," saying it was transitioning to slower growth.
"We believe Priceline shares should be held as part of growth portfolios, but investors should expect a more mature company growing at a slower pace," Stifel analyst George Askew said in a note to clients on Wednesday.
Orbitz said transactions tied to U.S. air travel fell in the second quarter, offsetting growth in transactions for hotel and vacation packages. Its net income was $4.6 million, or 4 cents a diluted share, in the second quarter, down from $8.9 million, or 8 cents a share, a year earlier.
Analysts expected Orbitz profit of 5 cents a share, according to Thomson Reuters I/B/E/S.
Orbitz said the total value of the company's travel bookings fell 1 percent to $2.97 billion in the second quarter, hurt by currency effects.
Quarterly revenue was flat at about $201 million, compared with $207.8 million expected by analysts.
Orbitz said it now expects revenue to rise 2 percent to 4 percent for the full year, compared with a May view of growth between 4 percent and 8 percent. It also pared its growth forecast for adjusted earnings before interest, taxes, depreciation and amortization. Orbitz said it now expects adjusted EBITDA for the year to be flat to up 5 percent; in May it had called for a 7 to 12 percent increase.
Orbitz shares were down 24 percent to $3.53 in afternoon trading as Priceline.com fell 16 percent to $569.56. Expedia shed about 5.5 percent to $55.64.
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