'New Era:' Stifel Downgrades Google, Priceline And Tripadvisor
"It's a new era for Internet stocks" according to Stifel's Scott Davis, who downgraded Google to Hold from Buy, and took similar rating actions on Priceline Group Inc (NASDAQ: PCLN) and Tripadvisor Inc (NASDAQ: TRIP).
Despite its reputation for innovation, Google is in the "early to mid-stages" of becoming a mature business, according to Davis, who sees no significant fuel for "future upside" for the stock.
The company's growth is now concentrated in low-margin businesses like YouTube and Google Play, while Facebook Inc is offering increasingly fierce competition for advertising dollars.
Google's "best days for its shares may be behind it," Davis said.
As for Priceline, foreign exchange woes plus rising competition from the likes of Expedia, Ctrip, Alibaba and Amazon.com will offer Priceline "difficulty in maintaining its organic growth" Davis said.
Tripadvisor is facing similarly high pressure from competitors, and Davis called the outlook for growth in its core business "concerning' in the face of increasingly strong year-over-year comparisons.
Tripadvisor's recently launched Instant Booking feature got lots of investor enthusiasm, but Davis said hotels have been signing up at a slower-than-expected rate.
At the same time, Tripadvisor's increasing efforts at marketing will pressure profit margins, according to Davis.
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