By Senad Karaahmetovic
JPMorgan analyst Doug Anmuth revisited the bank’s research coverage of Internet stocks to cut estimates and price targets on 26 companies to reflect “macro pressures, FX, & company-specific dynamics.”
The analyst notes a deteriorating macro environment amid surging fuel prices and high inflation, while JPMorgan economists see a 66% chance of a recession over the next two years and an 83% chance over the next three years.
“The Internet sector continues to have secular growth, but it is far more mature than in 2008-2009, and the ability to offset broader, macro trends is more limited. As a result, all of our companies are at risk in a slowing environment. Our biggest estimate reductions come in Online Advertising & ECommerce, though we are also reducing numbers across Subscription/Online Education, Online Travel, Rides & Food, & Work Related names in anticipation of a weaker operating environment in 2H22 & into 2023,” Anmuth told clients in a note.
On a more positive note, the analyst sees many of these risks already priced in as he reiterated Amazon (NASDAQ:AMZN), Booking (NASDAQ:BKNG), and Uber (NYSE:UBER) as the Best Ideas in this sector.
Among other price target changes, Anmuth cut the price objective on Alphabet (NASDAQ:GOOGL) to $2,800.00, on Amazon to $175.00 from $200.00, on Meta Platforms, Inc. (NASDAQ:META) to $225.00 from $275.00, on Netflix (NASDAQ:NFLX) to $230.00 from $300.00.