A Wall Street firm late Thursday initiated coverage of five top internet stocks — Amazon (AMZN), Facebook (FB), Google parent Alphabet (GOOGL), Pinterest (PINS) and Snapchat owner Snap (SNAP). All five internet stocks are leaders in their respective fields.
RBC Capital Markets analyst Brad Erickson picked internet stocks that stand out in the areas of advertising, e-commerce and cloud services.
Erickson gave outperform, or buy, ratings to Amazon, Facebook, Snap and Google. He put a sector perform rating on Pinterest. Amazon is his “favorite idea” in the group, he said.
“AMZN is one of the internet’s largest true alpha dogs, in our view, with unmatched scale in e-commerce,” he wrote in a note to clients.
Digital Advertising Has Long Runway
Meanwhile, Google has “significant advantages and capital to invest in numerous large, important adjacent markets,” he said. And Facebook “has created one of the most valuable ad franchises in the world.”
“Digital advertising has a long runway of growth ahead, led by the continued shift of consumer spend to e-commerce,” Erickson said. “With several trillions of dollars of consumer spending expected to shift online in the coming years, we believe digital advertising will be one of the biggest beneficiaries.”
The reports were issued after the market closed.
Price Targets Set On Internet Stocks
Erickson set a price target on Amazon stock of 4,150 and a target of 425 on Facebook. He put a price target of 3,400 on Alphabet. His price target on Snap is 88, while Pinterest is 58.
The coverage initiation comes at a time when Washington lawmakers have been increasingly critical of internet stocks for various reasons. They have threatened new legislation that focuses on antitrust and monopoly matters.
“Regulatory risk and overhang is inevitable across the group,” Erickson wrote.
“While we expect regulatory concerns to likely drive a relative overhang and ongoing headline risk for the group, we expect regulators to struggle to fully and adequately address the desired concerns while multiple significant structural barriers exist that we think generally favor big tech,” he said.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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