Stifel Says Buy The Dip In Facebook, RetailMeNot, Netflix, Yahoo! Ahead Of Earnings
Internet & Media analysts at Stifel issued a note late Monday offering some plays for potentially strong quarterly results on the heels of a recent pullback in the sector.
The firm's Jordan Rohan said, "Internet stocks often work through periods of being out-of-favor, even swift and severe pullbacks like the last few weeks. We believe this presents an opportunity..."
Facebook - "We believe the period of earnings outperformance for Facebook will continue through 2014..." Rohan noted shares of Facebook are down more than 20 percent from the high (at $72.59) and trade at a similar forward PE as in 2013, "even after adjusting for nearly 10% in dilution for acquisitions that we assume will have zero earnings contribution."
RetailMeNot - With shares of SALE down nearly 30 percent recently, Rohan reassured investors the company's operations "do not overlap significantly" with that of Coupons.com (NASDAQ: COUP). "75% of the revenue generated by Coupons.com comes from Consumer Packaged Goods companies, while the vast majority of RetailMeNot's revenue comes from national retailers," according to the Stifel analyst.
Rohan is looking for quarterly growth in mobile engagement to help drive sales.
Netflix - Stifel's Ben Mogil noted word of TV-based services from Apple and Amazon has created a bit of buzz around Netflix's model, but the analyst highlighted "These products are focused on the transactional (VOD and EST) markets and not the Netflix SVOD market."
Mogil is expecting Netflix to demonstrate solid sub growth for the quarter and moving forward.
The firm's note also mentioned expected strength in shares of Yahoo! (NASDAQ: YHOO), but instead attributed this strength to Alibaba and the upcoming IPO. "Any hint of tax efficiency on the sale of either tranche of the Alibaba stakes would add meaningfully to the sum-of-parts valuation," Rohan said.
Results out of these three companies are expected during the last couple of weeks in April and the first week in May. Netflix is expected on Monday, April 21st, Facebook is expected on Wednesday, April 23rd and RetailMeNot is expected to report on Monday, May 5th. Yahoo! results will be out April 15th.
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