In a research note out Friday, Nomura named Yahoo! Inc. YHOO, Facebook Inc FB and Google Inc GOOG as the best names in the Internet space. Nomura decreased its price targets on both Yahoo (from $59 to $57) and Google (from $625 to $600). The price target on Facebook was maintained at $90. All of the targets represent at least a 20 percent increase over current prices.
Specifically, Nomura said that investors should buy Yahoo ahead of any corporate action on the January 27 earnings call. The firm sees the potential for Yahoo to spinoff its non-core assets, unlocking shareholder value.
With a PEG ratio less than 1, Nomura sees Facebook’s growth continuing and believes its valuation relative to growth is constructive. It mentions that year-over-year spend among Internet marketers would be 48+ percent in Q4.
On Google, Nomura said that its P/E valuation is more attractive than Disney’s. Q4 revenue growth will come in at nearly 20 percent year-over-year, leading to an attractive historical valuation around 18 times earnings.
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