Credit Suisse, the famous Swiss investment bank, just released a 200-pages report on internet stocks in order to provide its clients with its forecasts on the sector and highlight the trends and stocks to follow in this widely diversified sector. We had access to this report and propose you a short sum-up of the ideas discussed through the study as well as the list of recommended stocks and related rationales. It is always interesting to have a look at the research papers from key investment banks such as Credit Suisse, Goldman Sachs or JPMorgan as their recommendation are followed by many institutional funds that can have a significant market impact and that are able to set market trends.
Internet stocks are negatively impacted by the USD appreciation
First of all, Credit Suisse indicated that it has updated its estimates across the sector as it factors in the appreciation of the USD versus the major global currencies. Most internet stocks (Google, Facebook, Priceline, Twitter…) have a substantial share of their revenues abroad and the appreciation of the dollar has a negative impact on their profits. Credit Suisse believes that the USD appreciation accounted for a decrease of 1-2% to revenue since September 2014. Nevertheless, the Investment bank highlights the fact that there was an improvement in investor sentiment and company monetization efficiency on the sector since the beginning of the year.
Amazon, Google and Facebook: Best internet picks for Credit Suisse
Please find below a sum-up of Credit Suisse’s top equity picks on the internet sector with the related rationale for each one of them.
- AMAZON – operating margin expansion likely to continue on shipping cost saving
- FACEBOOK – Street models are too conservative and underestimate the LT monetization potential of upcoming new products
- GOOGLE – narrowing of the mobile-desktop monetization gap – ramping contribution from display and other revenue sources (such as Google Play)
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