Social media giant Facebook will lead the “FANG” stocks higher on 2018 with no correction in sight, according to Evercore ISI.
Actually, given the large addressable marketplaces that are on the cusp of disruption, analyst Anthony DiClemente argues that the next wave of technology growth could be even larger than the last.
“Today’s leading tech companies are leveraging the internet to disrupt and take profits from large established industries, a good dynamic that’s driving real income and free cash flow progress,” DiClemente wrote to consumers on Tuesday. “Beyond that, smartphone ubiquity, the changeover from offline to digital marketplaces, and continued progress in individual adoption of emerging/founded digital platforms are rendering fuel for the next legs of growth.”
The analyst, who worked previously for Nomura Instinet, initiated coverage on a slew of companies in the area Wednesday with most of the so-called FANG stocks among his favorites.
By issuing a $225 price target on Mark Zuckerberg’s social press giant Facebook, the analyst believes that the company’s shares will rise 30 percent over the next year.
“Between 2013 and 2017, the share of website traffic approaching via Facebook is continuing to grow five-fold to exceed 40 percent, in this same period the value of the overall digital ecosystem has effectively doubled,” wrote DiClemente. “Perhaps the virtually all striking dynamic within social media may be the incredible progress of Instagram over the past three years. Based on the company’s disclosure in overdue September, Instagram’s user basic now stands at 800mn, a four-fold rise relative to just three years prior.”
Investors have also been keeping a close attention on Facebook’s digital training video ambitions, including it has the new “Watch” platform and ventures into sports content. The Wall Road Journal reported before this year that the business is willing to use up to $1 billion on original training video content.
For Amazon, DiClemente was as well quite optimistic on from Amazon Web Solutions to Alexa and Prime Instant Video. His $1,350 price goal reflects 18 percent upside over the next 12 months.
“Within both e-commerce and cloud processing, Amazon has established itself as the distinct market innovator,” he added. “Amazon’s competitive benefit, driven by its vast global infrastructure should guarantee continued attractive returns in our view.”
DiClemente as well issued an outperform score on Google-parent Alphabet along with a $1,230 selling price goal, representing 21 percent upside over the next 12 weeks. With the ongoing shift to portable platforms and web searches, the analyst argues that Google will “outpace” the growth of the overall search industry.
As the only FANG stock that did not receive an outperform score, Netflix could be facing a maturing subscriber base in the U.S., the analyst noted.
While DiClemente sees a long runway for subscriber progress overseas, a possible slowdown in domestic user progress may force the business to consider its selling price power. In October, Netflix declared that its $10/month high-definition plan right now costs $11, sending shares soaring at the time of the announcement.
To be certain, the analyst’s $210 selling price goal does spell meaningful, 14 percent upside for the business over the next year.