Oppenheimer Outlines the 'Best Pullback Opportunities'

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  • In last week's sell-off, which is poised to continue today, Facebook Inc FB, Netflix, Inc. NFLX and TubeMogul Inc TUBE are down sharply.
  • Oppenheimer's Jason Helfstein said that these three names represent the best "pullback" opportunities, with potential gains of 8 percent, 15 percent and 22 percent in Facebook, Netflix and TubeMogul, respectively.
  • Despite the price declines, the fundamental outlook for Helfstein has not changed, making these names attractive risk/reward setups. However, the analyst stressed that there are still risks.

Oppenheimer's Jason Helfstein said that given last week's performance, Facebook, Netflix and TubeMogul rise to the top as the "best ‘pullback' opportunities." But, Helfstein outlined that there are still risks.

For Facebook, Helfstein said that the risks relate to "slower US usage," a delay of companies' ‘experimental' ad budgets, and currency risks from overseas revenue. Year over year, Facebook is seeing a decelerating increase in total US minutes. Helfstein said that in May, minutes increased 21 percent, followed by 20 percent increase in June and 17 percent increase in July. From a revenue perspective, Helfstein said that advertisers may delay spend for "experimental" platforms, like Instagram. Finally, with 51 percent of its revenue coming from outside the U.S., the company may see headwinds from a stronger U.S. dollar.

At Netflix, those same currency headwinds come from a company that generates 28 percent of its revenues from outside the U.S. That outside revenue is also projected to grow at a strong 40 percent pace in 2016. An added risk to Netflix, Helfstein said, is that investors may "demand higher returns from ‘terminal value' stocks."

Finally, Oppenheimer said that TubeMogul is currently benefiting from a "shift into programmatic video," which helped revenues increase by 58 percent in Q2. However, spending may be dialed back if global macro concerns emerge as this is a burgeoning area.

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Posted In: Analyst ColorLong IdeasAnalyst RatingsMoversTechTrading IdeasFacebookJason HelfsteinNetflixOppenheimerTubeMogul
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