Wedbush analysts revealed Tuesday that the firm is initiating coverage of the Internet eCommerce and Digital Advertising sector with Outperform ratings on Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), MercadoLibre (NASDAQ:MELI), Meta Platforms (NASDAQ:META), Sea Ltd. (NYSE:SE), and Shopify (NYSE:SHOP).
Devitt, who will be co-covering GOOGL, AMZN, and SHOP alongside other analysts, also revealed the firm has started coverage on Pinterest (NYSE:PINS) and TripAdvisor (NASDAQ:TRIP) with Neutral ratings.
The price targets for each stock are:
- GOOGL: $160
- AMZN: $180
- MELI: $1,500
- META: $350
- SE: $48
- SHOP: $62
- PINS: $30
- TRIP: $17
Furthermore, Amazon was added to the firm's best ideas list as they believe the "strength of Amazon's core retail business is underappreciated."
"Amazon's core business is now well positioned with an industry-leading fulfillment infrastructure delivering 4x as many same-day or next-orders in the U.S. versus 2019," wrote the analysts.
Overall, Wedbush believes that the Internet eCommerce and Digital Advertising sector could be in for five to seven more good years ahead.
"eCommerce and advertising post-COVID growth rates are bottoming and the underlying secular growth trends underpinning the industry should re-appear in coming quarters," the analysts added. "We expect global eCommerce growth to return to ~10%+ levels and digital advertising to a similar 10%-12% in the coming year. In addition, we expect AI to become a growth stimulant for consumer technology over the next 2-5 years."
According to the analysts, GOOGL is well-positioned for the generative AI cycle, MELI has an outstanding management team, META is positioned as a major beneficiary of the approaching AI cycle, SE's reinvestment in growth should pay off over time, and SHOP is positioned to see improving revenue growth rates due to normalizing comps and rising margins.