Urupong
Wells Fargo initiated coverage on the large-cap internet sector, with just two stocks getting a buy-equivalent rating.
Amazon (NASDAQ:AMZN) was started with an Overweight and a price target of $159 per share and designated the Top Pick, with expectations that North American retail margins will return to 2019 levels in 2025.
“Note AGM comments from CEO Andy Jassy that suggest nat’l to regional fulfillment transition yielding strong early results,” analyst Ken Gawrelski wrote in a note. “Expect AWS growth to inflect positively in August, lapping customer spend rationalization and see exiting the year at 15% growth in December. EBIT ests 19% and 10% above in ’24 and ’25, respectively.”
Uber (UBER) snagged the other Overweight with $50 price target.
“We believe international competitors will retrench further, driven by regulatory issues (Didi) or morose private company funding environment,” Gawrelski said.
Among the 11 other stocks Gawrelski slapped ratings on, four stocks were Underweight, and seven were Equal Weight.
Etsy (NASDAQ:ETSY) was rated Underweight with a price target of $70 per share, with the company entering a more “growth-challenged” phase.
“Our analysis suggests that Etsy’s customer acquisition efficiency metrics are deteriorating after years of torrid GMS growth and take-rate expansion,” Gawrelski said.
Airbnb (ABNB) also received an Underweight with a price target of $99.
“While we would view re-acceleration of share gains as a result of lower (average daily rates) positively, we don’t believe Street ’24 or ’25 incremental margin expectations of 44% and 50% reflect the impact of lower pricing/higher competitive intensity.”
Also started at Underweight:
- Booking Holdings (BKNG), price target $2,257
- Expedia (EXPE), price target $93
Among notable Equal Weights, Alphabet (GOOGL) started with a $117 price target, with Gawrelski noting an AI transition in search format.
‘We expect pricing volatility that will drive headwinds to medium-term search growth,” he said. “Competitors are also likely to bid aggressively for Google’s search distribution partnerships, driving profitability lower. Even if Google maintains search leadership, we do not expect a replication of last decade’s prosperity for the company.”
Meta Platforms (META) is rated Equal Weight with a price target of $276.
“We believe near-term optimism around advertising acceleration and Advantage+ adoption is likely capped by diminishing returns on Advantage+ campaigns and less ad buyer optimism around Reels medium-term monetization,” he said.
Also started at Equal Weight
- Pinterest (PINS), price target $23
- Snap (SNAP), price target $10
- eBay (EBAY), price target $45
- Lyft (LYFT), price target $9
- DoorDash (DASH), price target $70
