In a new research note, the Internet team at Stifel resumed coverage of the internet sector, and analysts are not shy about the ratings or price targets on the market leading stocks. Despite continued concerns over multiples, these top companies make money and dominate their space.
Here are the seven Internet stocks back under coverage at Stifel rated Buy:
Facebook Inc. (NASDAQ: FB) handily beat second quarter earnings estimates, and almost all of Wall Street ratcheted up price targets. With mobile revenue and advertising numbers skyrocketing, the company has been a stellar performer in the last year. And with over 1 billion registered users around the world, Facebook is expected to continue to grow massive earnings and is now becoming competitive in search. The Stifel team sees a sustained growth rate of 30%+ for the next several years, citing increased uptake of Facebook Exchange (FBX), Instagram monetization, the introduction of a third-party mobile ad network, and video ads. The Stifel price target for the stock is $85. The Thomson/First Call consensus target is $86.15. The stock closed Wednesday at $73.77.
Google Inc. (NASDAQ: GOOG) is another mega-cap tech name that the Stifel analysts favor. They see new-found positive optionality in the company’s search business. And for the first time, Google seems to be making inroads into its long-sought effort to extend its search dominance into vertical search, which focuses on specific segments of online content. Many Wall Street analysts also think that Google’s cloud product belongs in the second-tier of its business lines (like Play and Nexus), and that it may prove meaningful in the future by offering value chain synergies with the core business. The Stifel price target for the Internet giant is $700. The consensus figure is posted at $672.98. Google closed Wednesday at $584.56.
LinkedIn Corporation (NYSE: LNKD) dominates the interconnecting of business professionals. I has more than 300 million members worldwide, making it the most valuable social networking site for business-to-business marketing today. The Stifel analysts remain positive on the stock long-term given the company’s large addressable markets, its well established business model, a still new — but promising — opportunity in sales and marketing solutions, and the stock’s relative — although much improved — underperformance. Stifel has a $250 price target, and the consensus is set at $235.44. Shares closed Wednesday at $216.14.
Pandora Media, Inc. (NYSE: P) is clearly not the only company that wants to be in the music streaming business, but it is the current leader in installation and use in the automotive world. The Stifel team expects a higher rate of Pandora adoption in new and used vehicles, which can help drive increased listenership and monetization of existing ad inventory. Advertising revenue has grown by more than 45% year-over-year, with total revenue jumping by 69% thanks to a near-tripling of subscription revenue, compared to just 26% growth in content acquisition costs. The Stifel price target for the stock is $34, and the consensus price target is $33.86. Pandora closed Wednesday at $28.35.
The Priceline Group Inc. (NASDAQ: PCLN) stumbled just briefly when it released earnings last week, posting slowing growth. The stock quickly rebounded as many Wall Street analysts noted the online travel giant beat earnings estimates and gave forward guidance above expectations. The Stifel team feels the growth potential remains and sees several long-term potential catalysts. The Stifel target for the stock is a huge $1,600, while the consensus is much lower at $1,488.65. Priceline closed Wednesday at $1,293.75.
TripAdvisor Inc. (NASDAQ: TRIP) is the world’s largest travel site. The company’s branded sites make up the largest travel community in the world. TripAdvisor reached more than 260 million unique monthly visitors last year, as well as more than 150 million reviews and opinions covering more than 3.7 million accommodations, restaurants, and attractions. Though trading at an expensive multiple, the Stifel team thinks that easier second half comparisons help justify the premium. The price target for the stock is $120, and the consensus target is $102.57. Shares closed trading Wednesday at $96.84.
Yelp Inc. (NASDAQ: YELP) is seen as a huge growth vehicle by Stifel analysts. They expect the company to grow revenue at a 54% compounded annual rate in the next two year. There also has been continued chatter on Wall Street about a potential buyer for Yelp. Many point to potential synergies if Yahoo acquires Yelp, while others suggest it would be a good fit for Expedia. Either way, Yelp has a massive sales force and relationships with more restaurants than any other site. Stifel has an $85 price target, and the consensus is at $83.84. Shares closed Wednesday at $74.46.
The Stifel stocks to buy cover almost every single specific internet sub-sector. This gives investors the ability to pick a stock where they feel most comfortable with growth potential going forward. It is important to remember that these stocks are suitable for aggressive growth accounts, not for conservative lower risk portfolios.
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