Stifel's 2020 Vision For Internet Stocks

Stifel offered its 2020 Vision on Internet stocks Monday.

Analysts led by Scott Devitt noted that “with a volatile 3Q14 earnings season behind us, we are publishing our updated 2020 Vision Comp Table...We hope to re-inject context around the pendulum of investor psychology that we believe oscillates between a focus on the long-term and the short-term.”

Below are highlights from the report.

Long-Term Growth

Alibaba Group Holding Ltd BABA, Facebook Inc FB, LinkedIn Corp LNKD and MercadoLibre MELI were recommended “as solid long-term Internet growth franchises, which should appreciate in value over the long run.”

Mature Growth

“For investors more focused on maturing growth at a reasonable price, we point to Priceline and Google as dominant franchises with solid valuation support.”

The report indicated that the firm remained “supporters of TripAdvisor due to the long-term business potential but are discouraged by management’s model of inconsistency.”

Small Caps

"We highlight Pandora as a stock with a number of intermediate-term catalysts including vehicle adoption, the December 2015 Copyright Royalty Board decision, and international expansion."

Neutral To Bearish

“We maintain a neutral view on Amazon shares due to the combination of slowing growth and a non-discretionary investment cycle. We believe Amazon is trying to protect its highly-profitable media franchise while also attempting to grow in retail in markets being well-served by capable peers - both battles may prove to be costly to an otherwise beloved and well-managed consumer brand. In our view, the debate on Amazon should not be whether or not margins will rise but how much will it earn in absolute terms at mature growth rates.”

“We maintain a Sell rating on Twitter as the company still trades at about 20x 2020 PF EPS and we believe there is significant potential for downside risk to our long-term estimates due to declining engagement and slowing user growth. We also highlight that while many investors believe Twitter to be under-monetized vs. Facebook, we find Twitter to be over-monetized on a time-adjusted basis.”