How MKM's Rob Sanderson Is Viewing The Rest Of Internet Earnings Season

In a report published Wednesday, MKM Partners analyst Rob Sanderson commented that earnings season has been "favorable" for Internet large-caps so far. Looking forward to the remaining large-cap earnings, a "strong follow-through" would be "good for investor sentiment" and the group could see a "strong rally" in the bottom half of 2015.

Pandora (July 23): More Interested As A Second-Half 2015 Play

Pandora Media Inc P is expected to report a "solid" quarter of monetization expansion but "soft" user and usage metrics. Nevertheless, a solid advertising revenue and outlook has the "potential to reverse" the stock in the near-term.

However, Sanderson noted that he is "more interested" in what the bottom half of 2015 has in store for Pandora. He predicted that the potential exists for a "more sustainable" move higher in shares heading into the CRB decision in mid-December.

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Akami (July 28): Fundamentals Remain ‘Strong'

Akami Technologies, Inc. AKAM's fundamentals remain "strong" given an accelerated growth in security products with the potential for media acceleration in the bottom half of 2015.

The analyst suggested that investors "will return to the stock" ahead of the media cycle and that 2016 will prove to be a year of margin improvement and multiple expansion.

Twitter (July 28): ‘Weak' Quarter for User Growth

Twitter Inc TWTR will report a "weak" quarter for user growth. The analyst pointed out that Twitter's monthly active user metric now includes SMS "fast followers," which accounted for six million user additions.

Moving forward, Sanderson noted that Twitter is unlikely to break down its monthly active user base. The analyst also added that while some investors believe potential declines in monthly active users is already reflected in the stock, this may not be true as shares "would go lower" if user growth becomes negative.

Yelp (July 28): Upside To Expectations A Possibility

Yelp Inc YELP could beat expectations this quarter after missing its first quarter ever.

Sanderson noted that Yelp's management "insists" that its sales productivity is back on track. The analyst stated that an uptick in brand advertising and a full quarter of revenue from the Eat24 acquisition could drive $3 million to $5 million in upside to the Street's local ad sales expectations.

In addition, Sanderson noted that traffic directed to Yelp from Google Search has been a "major source of concern" following changes to Google's algorithm. However, the analyst added that if ComScore data he has seen is "directionally correct," then domestic traffic should remain "strong."

Facebook (July 29): ‘Another Strong Quarter'

Finally, Facebook Inc FB is expected to report "another strong" quarter for advertising sales and continued momentum with large brand advertisers.

In addition, Facebook is likely to show "expense discipline" and may lower its full year range for expense growth. This has been investors' main concern that acted as an "overhang" until the recent stock breakout.