What's Coming For Internet Earnings: From Amazon To Wayfair

• Heading into the fourth quarter Internet earnings season, Raymond James analysts Aaron Kessler and Justin Patterson previewed the sector.
• They also selected a few top picks, including Amazon.com, Inc. AMZN, Facebook Inc FB, LinkedIn Corp LNKD, Wayfair Inc W, The Rubicon Project Inc RUBI and Ctrip.com International, Ltd. (ADR) CTRP.

Based on industry data points and Raymond James’ channel checks, Kessler and Patterson remain overall bullish on Internet fundamentals headed into the fourth quarter fiscal 2015 earnings season, even in spite of recent macro worries and stock market volatility. Due to the macro concerns, analysts believe investors will be keenly focused on commentary and guidance for the first quarter of 2016.

The analysts anticipate the recent weakness in the British Pound will have a “modest negative impact on the global Internet companies (UK represents ~10% of sales for Google & Amazon). In addition, the tumble in the Chinese Yuan will also impact on Chinese companies’ results, the research note continued.

Heading into the earnings season, Raymond James' top large-cap picks are:

• Facebook: “Checks indicate strength for Instagram, mobile, Dynamic Product Ads.”
• Amazon: “Expect solid revenue growth including AWS and we believe 4Q street margin estimates are conservative.”
• LinkedIn Corp: Expect improved core performance in the fourth quarter, and success with Lynda.

The firm’s top small- and mid-cap picks included:

• Wayfair: Fourth quarter holiday and traffic data points are strong quite robust.
• Rubicon Project: Anticipate sustained programmatic strength.
• Ctrip: “Expect continued momentum driven by online/mobile share gains as well as improving core margins driven by industry consolidation.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.