5 Consumer Internet Names Deutsche Bank Is Looking At As GoDaddy's Silent Period Expires

In a report issued Monday morning, analysts at Deutsche Bank initiated coverage on four companies in the website presence and tools provider space. The firm gave GoDaddy Inc GDDY a Buy rating, and Wix.Com Ltd WIX, Endurance International Group Hldgs Inc EIGI and Rightside Group Ltd NAME a Hold rating. In addition, they upgraded Web.com Group Inc WWWW from Hold to Buy. Below, the arguments sustaining these ratings.

According to the report, Deutsche Bank sees a “collision of factors driving growth in the web presence space over the next decade.” Explicitly:

1) Complexity: going forward the analysts expect “increased complexity for SMBs and individuals in managing digital strategies including websites, apps, transactions, marketing and social, across multiple device-types.

2) Tools: the explosion of powerful free-mium tools are allowing SMBs to do more today than ever before at much lower cost.”

How To Play The Space

In the website presence and tools provider space, the analysts at Deutsche Bank prefer to companies with “strong presence on key ‘on-ramp’ paths when SMBs look to build their website presence,” large customer bases, scalability, profitable businesses, strong products, high marketing efficiency and good customer support.

In this line, they like GoDaddy and Web.con the best. GoDaddy is the leading company in the industry with “enormous scale and attractive unit economics.” For its part, Web.com is “recovering from a rough patch, but has a long track record of delivering value to shareholders, has solid fundamentals (albeit lower growth),” and the analysts believe it has “great potential for upside estimate revision and multiple expansion as sentiment improves.”