By Sarah Roden
From lawsuits to mergers, Internet stocks had a busy week. Find out what analysts are saying about 3 of the most popular Internet stocks:
Google (NASDAQ:GOOGL)
This week, the European Union formally accused Google of antitrust violations, claiming the search engine favors its own services over others in search results. The lawsuit is aimed at Google’s shopping comparison website and Android software. The EU claims that Google unfairly directs shopping search queries to their own platform and that the company unfairly pre-installs its applications onto Android platforms. Google faces the potential of paying billions in fines.
On April 15, Google executive Amit Singhal posted a blog refuting the antitrust accusation. Singhal noted that Google now competes with more search engines than ever before and Google’s specialized results for traveling and leisure have actually helped boost profits for Yelp, TripAdvisor, and Expedia (NASDAQ:EXPE). Furthermore, Singhal offered a graph illustrating that several European shopping sites garner more unique visitors than Google’s shopping platform.
Despite the legal battle, analysts remain bullish on the stock. On April 14, top analyst Youssef Squali of Cantor Fitzgerald maintained a Buy rating on Google with a $635 price target. Squali noted, “We continue to see Google as one of the best plays on global online ad and commerce growth at a compelling valuation.”
Youssef Squali has a 75% success rate recommending stocks with a +26.1% average return per rating.
On average, the top analyst consensus for Google on TipRanks is Moderate Buy.
Alibaba (NYSE:BABA)
On April 15, Alibaba announced a $2.5 billion deal to publicly list its online pharmacy on the Hong Kong Stock Exchange. This move positions the Chinese e-commerce giant to benefit from China’s growing healthcare sector. The pharmaceutical arm of the company will be traded in Hong Kong under Alibaba Health Information Technology Ltd. The company is hoping the move will morph the pharmaceutical platform into a retailer of over-the-counter drugs into a platform for prescription drugs, pending Chinese legislation.
This comes as good news for the Chinese e-commerce retailer as Alibaba was recently hit with negative publicity surrounding a counterfeit goods scandal and the abatement of online lottery ticket sales.
On April 14, analyst Cheng Cheng of Pacific Crest maintained a Buy rating on Alibaba with a price target of $101. Cheng noted several near-term headwinds, such as the crackdown on online lottery ticket sales, which is predicted to hurt Alibaba’s sales. Additionally, Cheng increased his operating expense estimate and noted that Alibaba is continuing to regain public trust after negative publicity surrounding counterfeit goods. Cheng commented, “Despite the negative estimate revision and lower price target on Alibaba… We continue to see Alibaba as the dominant player in a rapidly growing e-commerce market, and see improving take-rate trends for Alibaba as the platform provides more value to both consumers and merchants.”
Cheng Cheng has a 42% overall success rate recommending stocks with a +10.9% average return per recommendation.
On average, the top analyst consensus for Alibaba on TipRanks is Strong Buy.
Yahoo (NASDAQ:YHOO)
Yahoo is reportedly ironing out the details in a deal to purchase Foursquare for $900 million. Foursquare, a social media platform that sends your location to friends, would add a strong social mobile platform to Yahoo’s portfolio. Although some sources are disputing the acquisition rumor, others are pointing to a friendship between Yahoo CEO Marissa Mayer and Foursquare CEO Dennis Crowley as an indicator of the deal.
On April 13, analyst Mark May of Citigroup reiterated a Buy rating on Yahoo, though he did not provide a price target. May noted that once you disregard Alibaba, Yahoo’s core business is undervalued. The analyst commented, “We believe core YHOO remains undervalued and that the multiple will re-rate when the BABA stake is spun out in 4Q15. We see opportunity for investors that are willing to be patient, especially if they employ a strategy to hedge the BABA risk.” He added, “We also note that our estimated 2.5x EBITDA multiple may in fact be high… and could prove to be conservative as the company appears to have accelerated headcount reductions and [management] recently discussed company efforts to deliver EBITDA ahead of analyst expectations.”
Mark May has an overall success rate of 66% recommending stocks with an average return of +11.3% pre recommendation.
On average, the top analyst consensus for Yahoo on TipRanks is Moderate Buy.