Piper Jaffray analyst Michael Olson continues to expect the FAANG complex to outperform for the rest of 2018. Olson's call isn't a sweeping bet on the mightiness of FAANG stocks, but rather a look at company-specific factors that may keep investors bullish.
Olsen ranked his FAANG coverage from the names he likes the most to the least.
- Price target: $2,075
- Upside potential: 15%
- Analyst commentary: "Core retail appears only "OK" for Q2, but potential for "other" (advertising) & Amazon Web Services upside; In addition to the massive new addressable markets that Amazon (AMZN) is attacking (>$1 trillion new TAM - grocery, pharma, gaming, etc.), the ad business may double in 2018."
- TheStreet's quick take: "The thing that we feel is that Amazon is an advertising company, Amazon is a web services company, meaning that it's a data center, and Amazon's a retailer, maybe the greatest retailer ever," TheStreet's founder Jim Cramer told Action Alerts PLUS club members on their latest monthly call. "And we want to be levered to what I regard as being maybe the greatest growth story of all time." Mic drop.
- Price target: $420
- Upside potential: 15%
- Analyst commentary: "Netflix (NFLX) is down ~10% since reporting Q2. While results were disappointing, we believe temporary issues like the World Cup and weak content slate had a hand in the weakness; Netflix has less than 15% share of international internet households (excluding China) vs. 60% in the U.S. On average revenue per user, our survey shows subs would pay ~40% more for Netflix today."
- TheStreet's quick take: When a momentum name such as Netflix lets Wall Street down like it did with second quarter earnings, it may take some time to rebuild enthusiasm on Wall Street.
- Price target: $214
- Upside potential: 11%
- Analyst commentary: "In-line [stock] with Nasdaq
year to date as investors take "wait-and-see" approach to iPhone after a weaker iPhone X launch; services (15% of revenue) remains an undisputed positive driver; Expect wider array of next-generation (X-style) iPhones in the fall. More selection (iPhone X "Lite" & "Plus") could drive unit upside (we model ~4 million units above Street for second half 2018)."
- TheStreet's quick take: Goldman Sachs is a bear on the cheapest FAANG stock, Apple. Here's why. Also keep in mid that smartphone sales continue to slow.
- Price target: $250
- Upside potential: 20%
- Analyst commentary: "Continues to co-dominate ex-China digital advertising along with Alphabet, as advertisers shift budgets from offline channels into high return on investment targetable online channels; A new focus on investments in Watch content and safety and security may reduce nearterm margin expansion potential. Additionally, continued "chatter" related to security & privacy may be a cloud that follows Facebook (FB) in the coming months."
- TheStreet's quick take: Real Money contributor David Butler thinks Facebook offers a compelling value at current levels. "The revenue/earnings bumps that occurred even after that huge dramatic data scandal show that consumers are relatively undaunted by the prospect of sacrificing their personal privacy for superfluous social media entertainment," Butler says. "In a way, this should terrify us. At the same time, it sure does put investors at ease."
- Price target: $1,350
- Upside potential: 14%
- Analyst commentary: "Positives include secular shift of offline to online marketing, dominant positions in search, video, and display ad industries, as well as "call-option" potential on GCP and other bets; We do not see any specific catalysts to point to in the near-term, so investors will have to rely on periodic upward estimate revisions to drive the stock."
- TheStreet's quick take: Alphabet has had some problems in recent quarters expanding its profit margins amid investments in people and Waymo. Here's what TheStreet's tech columnist Eric Jhonsa thinks investors need to focus on right now on Alphabet.
Why Jim Cramer's Action Alerts PLUS is bullish on Facebook, Apple, Amazon and Alphabet.