7 Internet Stocks Goldman Sachs Loves
In a new research note, Goldman Sachs said that it remains positive on Internet stocks based on reasonable valuations and 2015 expectations. Additionally, Goldman said that sector growth opportunities are high, with twice the growth rate and "higher returns relative to market averages."
At present, the Nasdaq 100 index is outperforming its peers, up 0.6 percent.
Specifically, Goldman highlighted seven names: Amazon.com, Inc. (NASDAQ: AMZN), Criteo SA (NASDAQ: CRTO), eBay Inc (NASDAQ: EBAY), Priceline Group Inc (NASDAQ: PCLN), LinkedIn Corp (NYSE: LNKD), Twitter Inc (NYSE: TWTR), and Wayfair Inc (NYSE: W).
- Amazon: Goldman said that margins will continue to come second to investment; however, the 2014 margin cuts will "mark a low point." The company still has high returns on invested capital and, with the company trading at 21x 2015 earnings, Goldman argued that "Amazon is particularly attractive from a risk/reward perspective."
- Criteo: Criteo is the best of breed in a challenged ad tech industry, Goldman said. However, the company fell 13 percent from its post-earnings high while the industry has only fallen 11 percent. Goldman pointed out that with potential catalysts this year, it is reiterating its Buy rating.
- eBay: eBay has the potential for accelerating growth in 2015 as year-over-year comps are "easier," Goldman said. With that as the backdrop, Goldman pointed to "significant value relative to risk" in the stock.
- Priceline: Priceline will benefit "disproportunately" from a strong leisure travel environment, according to the Goldman note. That keeps the risk/reward favorable and underscores Goldman's buy rating.
- LinkedIn: Goldman was overwhelmingly positive on LinkedIn, saying that it has the "highest potential for upward revisions to growth within our coverage." With new products taking hold, the analysts have a strong Buy.
- Twitter: Goldman strikes down the notion that monthly active users is the only metric that matters at Twitter. Instead, the analysts point to strong advertiser momentum that will drive "outperformance." On the opportunity to monetize logged-out users, Goldman said it is "financially significant" with the opportunity to drive investor returns.
- Wayfair: After its lockup expiration, Wayfair is at a "good entry point," the note said. Goldman was impressed by the way that Wayfair is driving online penetration in home retail. Relative to peers, Goldman said it expects Wayfair to see "improved customer growth versus expectation."
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