These are the 5 internet stocks you should buy right now, according to Citi

Facebook ranked as No. 1 internet stock by bank, which ranks only Twitter as a sell among 16 companies focused on web

Analysts at Citigroup released a ranking of internet stocks Wednesday that investors may want to consider if they’re looking to make money off companies underpinning the vast web.The brokerage has 16 internet stocks in its coverage area, ranging from Facebook Inc. FB, -0.09%   , its top pick, to Twitter Inc. TWTR, -0.13%   , the only stock it rates as a sell.

Many major tech stocks are not included because internet is not the companies’ main focus. For instance, Apple Inc. AAPL, -0.23%   is considered a hardware company even though it continues to expand its online software and services category.

Citi breaks its coverage of these stocks into three main areas: internet media, e-commerce and online travel.

Here are Citi’s top five internet stock picks in order:

Facebook: The social media giant has “significant opportunity in video, Instagram, messaging” and other areas of business, according to Citi. Growth is expected to slow in the near term as Facebook reduces ad load, but that is widely expected. The deceleration is viewed as just a hiccup in the trajectory of an otherwise high-growth company.

Facebook is also still in early stages of monetizing Instagram, its popular photo-sharing app, and messaging app WhatsApp. Last quarter, Facebook reported a 51% increase in revenue to $8.81 billion as it continued to grow mobile users and sell mobile ads. Last summer, it launched Instagram Stories, a feature that mirrors a popular offering from Snapchat, whose parent company, Snap Inc.SNAP, -0.44%  , recently went public in the largest U.S. tech IPO since Facebook’s.

Also Read: Snap stock suffers first major selloff since going public

Citi has a buy rating and $165 12-month price target on the stock. Shares of Facebook gained 0.3% to $137.69 on Wednesday and have increased nearly 16% in the past three months and 30% in the past year, outperforming the S&P 500 index SPX, +0.08%  , which is up 5.5% in the past three months and 20% in the past year.

Alphabet: The Google parent has to tackle increased traffic acquisition costs and decelerating search revenue as it faces new competition in search from companies such as Facebook and Amazon.com Inc. But the company’s mobile search and cloud businesses, as well as YouTube, which will soon launch a subscription-based streaming TV service, are viewed as attractive opportunities overshadowing the problem areas.

Last quarter, Google’s profit margins slipped to 76% from 78% in the year-earlier period. However Citi said “focusing on margin compression misses the big picture.”

The brokerage ranks Alphabet Inc. GOOGL, +0.49% GOOG, +0.40%  a buy with a $985 price target on the stock. Shares of Google have gained 7.5% in the past three months and 20% in the past year, virtually in line with the S&P 500. They increased 0.5% to $855.76 on Wednesday.

Amazon: Amazon’s AMZN, +0.04%  AWS cloud business, dominance of e-commerce, growing influence over the logistics that have long been controlled by United Parcel Service Inc. UPS, +0.16%   and FedEx Corp. FDX, -0.63%   , and its fast-growing media and Prime subscription businesses are all seen as major positives that may propel the stock.

While investments the company makes in original content and other areas related to its expansion, as well as price cuts tied to AWS, may pressure margins near-term, Citi said top-line trends at AWS and retail remain strong. “Expect long-term payoff from these investments, and believe there is potential for material improvement in margins and EPS over the long-term,” the bank said.

Read Also: These stocks are outrunning the bull market with quadruple-digit gains

Citi has a buy rating and $960 target on Amazon stock. Shares of Amazon gained 0.5% to $850.58 on Wednesday and have increased 11% in the past three months and nearly 52% in the past year, outperforming the S&P 500.

Priceline: The travel bookings site is the “clear market leader” in hotel bookings, which Citi said is “the most attractive online travel sector.” Last quarter, Priceline Group Inc.’s PCLN, +0.20%  revenue jumped more than 17% year-over-year, which it attributed to strong growth in hotel revenue. The company did provide an earnings per share outlook for the current quarter that fell short of expectations, but investors seemed to have shrugged that off as Priceline has a history of under-promising and over-delivering.

Will Snap reinvigorate the IPO market?

(1:09)

Snap went public in the largest tech IPO in the U.S. since Alibaba. Yet some investors question the company's long-term health and effect on the IPO market.

The company’s ability to diversify beyond the trip-planning platform, which mirrors that of rivals such as Expedia Inc. EXPE, +0.14%  , is also seen as a noteworthy competitive edge. Citi said the company has a positive record of executing on new initiatives, and may, therefore have success with some of its newer business lines, such as virtual reality and business travel. Last year, Priceline launched a mobile app called Booking Experiences that helps travelers plan their trips with previews of destinations and pop-up notifications providing information when travelers walk past attractions. Augmented reality will enable the company to do this more seamlessly, while virtual reality could help potential travelers explore places before they book.

Citi has a buy rating and $1,880 price target on the stock. Shares of Priceline gained 0.7% to $1,748.29 in afternoon trade and have climbed 13% in the past three months and more than 36% in the past year, outperforming the S&P 500.

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EBay: This is an interesting pick because of the intense competition it faces against much stronger and larger rival Amazon. However, Citi touts eBay Inc.’sEBAY, -0.42%  “modestly improving growth,” potential for “significant capital returns” and value stemming from strategic mergers and acquisitions as reasons why it’s a fairly-valued stock that’s worth buying.

In January, eBay posted a 3.1% increase in revenue for the key holiday-shopping period, marking its fourth straight quarter of top-line growth. The company may not be as big as Amazon, but it is well-positioned for the continued shift to online and mobile shopping, which is increasingly weighing on traditional brick-and-mortar retail companies.

It’s also a much cheaper stock. Citi has a buy rating and $36 price target on eBay. Shares of the online marketplace fell 0.3% to $33.37 on Wednesday and have gained 13.4% in the past three months and 38.6% in the past year, outperforming the S&P 500.

Yahoo Inc. YHOO, -0.09%   and GrubHub Inc. GRUB, +0.60%   are the only two stocks in Citi’s coverage of internet stocks with buy ratings that did not make its top-five list. Verizon Communications Inc.’s VZ, +0.24%  planned purchase of Yahoo will provide cash to shareholders and remove some of the complexity in the business, said Citi, which rates Yahoo a buy with a $49 target. GrubHub is investing in a number of near-term initiatives that could support long-term growth, said the analysts, which have a buy rating and $44 target on the stock.

By Jennifer Booton

Source: http://www.marketwatch.com/story/these-are-the-5-internet-stocks-you-should-buy-right-now-according-to-citi-2017-03-08

Snap soars about 50% out of the gate

Snap started trading at $24 a share on the New York Stock Exchange on Thursday, rising 41.2 percent from its pricing at the open.

About 100 million shares changed hands in the first 30 minutes of trading — by far the most active stock on the NYSE — after it opened shortly before 11:20 a.m. on Thursday in New York. The stock last traded around $25 a share, up about 48 percent, around 3 p.m. ET.

The company, trading under the ticker SNAP, priced its 200 million share public offering at $17 a share on Wednesday. The IPO was 12 times oversubscribed, sources said.

The opening price of $24 puts the company's market capitalization at about $33 billion, about the size of Marriot and Target. Twitter's market cap is about 11 billion, while Facebook's is about $395 billion.

The young ephemeral photo messaging company posted a $515 million loss last year. Nonetheless, investors have bet on its quickly growing revenue and visionary leader, 26-year-old co-founder CEO Evan Spiegel.

Mark Lennihan | AP

Snapchat co-founders Bobby Murphy, left, and CEO Evan Spiegel sign a guest book at the New York Stock Exchange as Snap celebrates its IPO, Thursday, March 2, 2017.

Spiegel arrived at the stock exchange on Thursday morning to ring the bell, with supermodel fiancee Miranda Kerr in tow, documenting with pictures on the app.

The Venice, California-based company, which serves augmented reality and cinematic advertisements to its young adult audience, could be a bellwether as other start-up giants, such as Airbnb and Uber, mull a public offering.

Snap enters the public market a day after the three major U.S. stock indexes posted their best session of the year.

Here's how the company stacks up so far to other big techIPOs, according to CNBC analysis of data from FactSet and Renaissance:

• Facebook went public on May 18, 2012, priced at $38 per share. It gained only 0.61 percent in its debut closing at $38.23. 
  -Deal Size: Almost $16 billion
  
• Twitter went public on Nov. 7, 2013, priced at $26 per share. It gained 72.69 percent in its debut closing at $44.90. 
  -Deal Size $1.82 billion (shares used to calculate do not contain the overallotment)
  
• Alibaba went public on Sept. 19, 2014, and priced at $68 per share. It gained 38.07 percent in its debut closing at $93.89. 
  -Deal Size $21.77 billion (not including overallotment or green shoe)
• LinkedIn went public on May 19, 2011, and priced at $45 per share. It doubled in its debut, gaining 109.44 percent to close at $94.25. 
  -Deal size $352.8 million

Anita Balakrishnan

Source:http://www.cnbc.com/2017/03/02/snapchat-snap-open-trading-price-stock-ipo-first-day.html

Wall Street Breakfast: Snap Pricing On Stage Tonight

 Includes: AAPL, AMTD, AMX, AMZN, BAYRY, BJK, BRK.A, BRK.B, CRM

Snap will price its IPO after today's market close in the most eagerly awaited tech offering since Alibaba (NYSE:BABA) went public in 2014. Reports suggest pricing could be $1-$2 above its $14-$16 marketing range, which would result in a valuation of $19.5B-$22.3B from listing on the NYSE. In September, the company changed its name to Snap (Pending:SNAP) from Snapchat to reflect its intent to branch out into myriad products, like Spectacles and a recently reported drone.

Click button on the left bar to purchase SnapChat spectacles

Economy

U.S. futures are flying higher following Donald Trump's first address to Congress. The President pledged to overhaul the immigration system, improve jobs and wages for Americans, and promised "massive" tax relief to the middle class and tax cuts for companies. He also plans to ask Congress for $1T in infrastructure investment - guided by "Buy American and Hire American" - and laid out some principles for an Obamacare replacement.

Rate hike probability keeps rising... San Francisco's John Williams said yesterday that an interest hike will be under "serious consideration" in March, while New York's William Dudley feels the case for tightening "has become a lot more compelling." All eyes are now on today's speech from Fed Governor Lael Brainard, who has been one of the most vocal advocates on the board for a slower interest-rate path.

Activity in China's manufacturing sector expanded in February, according to twin surveys, continuing the recovery seen since the second half of last year. The official PMI, compiled by the government's National Bureau of Statistics, found activity rising to a three-month high of 51.6, up from 51.3 in January. The unofficial Caixin PMI - which has a greater representation of private enterprise - rose to 51.7 vs. 51.0 on a seasonally adjusted basis.

Two former officials and a retired judge have won the right to compete to become the next leader of Hong Kong, a job that requires balancing the demands of Communist Party rulers in Beijing and growing calls for democracy at home. Former civil service chief Carrie Lam grabbed the most nominations out of a 1,200-strong committee stacked mostly with Beijing loyalists. The same committee will pick the next leader in a secret ballot on March 26.

In a press conference minutes ago, Francois Fillon confirmed he will continue in the race to become the next French president. The announcement came after he postponed his visit to the Paris Agricultural Salon, an important fixture on the campaign trail, and followed reports that his campaign manager stepped down. Fillon has been summoned by investigating magistrates over a "fake work" scandal, an inquiry he criticized as a "political assassination."

Stocks

An outage at Amazon Web Services' S3 storage service disrupted internet traffic across the U.S. on Tuesday, showing the increasing power cloud companies are having over large portions of the web. "For S3, we believe we understand root cause and are working hard at repairing," AWS said in its most recent tweet. Despite the major disruption, Amazon (NASDAQ:AMZN) shares only dropped about half a percent yesterday on the news.

Apple has some products other than the iPhone on the horizon that are "essential to Apple's (NASDAQ:AAPL) growth," CEO Tim Cook said at the company's annual shareholder meeting. The tech giant is investing a "fair amount" into R&D, including "future stuff [he] can't talk about." Cook didn't go into details, but lauded investors for thinking long term, especially Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B).

At the Economic Club of Washington, General Motors (NYSE:GM) CEO Mary Barra said the automaker was exploring opportunities with PSA Group (OTCPK:PEUGF), but didn't talk about a sale of Opel, which has lost money for 16 straight years. Some reports in Europe have suggested GM could have a deal with PSA as early as next week, but Barra declined to discuss a timetable.

CEO Travis Kalanick said he would seek leadership advice after a run of troubling news involving UBER, capped by a recent video of him berating one of the ride-hailing service's drivers. In a note to employees, Kalanick vowed to "grow up" and said he was "ashamed" of the behavior captured by Fawzi Kamel's dashboard camera. "This is the first time I've been willing to admit that I need leadership help and I intend to get it."

Fidelity blew up the online brokerage sector yesterday after cutting stock and ETF trading commissions to $4.95 from $7.95, following Schwab (NYSE:SCHW), which slashed its commissions to $6.95 from $8.95 in early February. Hit hardest was TD Ameritrade (NASDAQ:AMTD), which tumbled 10.5%, and immediately announced a cut in its commissions to $6.95 from $9.99. Other downward movers: E*Trade (NASDAQ:ETFC) -7.3%; Schwab (SCHW) -3.2%; Interactive Brokers (NASDAQ:IBKR) -2.6%.

Deutsche Boerse's chief executive said it was regrettable that LSE (OTCPK:LNSTY) had decided not to sell its trading platform MTS, all but ending a planned merger, but the German group could continue on its own. "We feel very well prepared as a company for the future," DB's (OTCPK:DBOEY) Carsten Kengeter declared, adding that "it's pointless to me to speculate on what the reasons behind our merger partner's decision were."

Gambling revenue in Macau surged almost 18% to 23B patacas ($2.9B) in February as more visitors came to the Chinese territory over the national new year holiday. Macau's gambling revenues have also been rising over the past seven months, buoyed by the opening of multi-billion dollar casinos by Sands China (OTCPK:SCHYY) and Wynn Macau (OTCPK:WYNMY). Related tickers: BJK, MPEL, MGM, OTCPK:MCHVF, OTCPK:MCHVY, OTCPK:GXYEF, OTCPK:SJMHF, OTCPK:SJMHY

Bayer's gain is Covestro's pain... Shares in Covestro (OTCPK:CVXTY) tumbled as much as 8.5% overnight after Bayer (OTCPK:BAYRY) placed 22M shares of the plastics company, which nearly tripled since the spinoff of the business. The sale will allow Bayer to reduce its debt pile and help fund the takeover of Monsanto (NYSE:MON), however, the placement at €66.5 a share is well below Covestro's closing price on Tuesday.

Looking to boost profitability over the next two years, Hershey (NYSE:HSY) plans to eliminate 15% of its global workforce, or around 2,700 jobs. The Pennsylvania chocolatier and other food makers have struggled in recent years with changing eating habits in the U.S. and slower economic growth in emerging markets. Hershey hopes the move will help it reach an adjusted operating profit margin as high as 23% by the end of 2019.

The chief executive of Unilever, the consumer goods group that recently rebuffed a $143B takeover proposal from Kraft Heinz (NASDAQ:KHC), was paid 20% less last year than in 2015, taking home €8.4M. The decrease follows a change in targets from long-term incentive schemes. Unilever's (UN, UL) Paul Polman has often said he would work for free and is "embarrassed" by the amount he is paid.

Mexico's telecoms regulator has discussed forcing Carlos Slim to legally separate part of his fixed-line unit Telmex from the rest of the company, a move that would intensify antitrust rules against the business. On Monday, its board voted on whether to toughen, maintain or loosen rules against America Movil (NYSE:AMX) and Grupo Televisa (NYSE:TV), and sources told Reuters they expected the proposal was on the table.

Shares of Time climbed almost 5% during extended trading after Bloomberg said the magazine company asked a number of suitors to submit their final acquisition offers by next week. According to the report, five parties have expressed interest in purchasing the firm. Two potential TIME buyers are Meredith Corp. (NYSE:MDP) and an investor group led by Edgar Bronfman Jr., while one of the other three bidders is a publicly traded company.

YouTube has unveiled a web-TV service that will offer a package of over 40 broadcast and cable channels for $35 a month, making the tech giant the latest entrant in a race to win over millions of consumers who are shifting away from traditional TV. The new service, dubbed YouTube TV (GOOG, GOOGL), is set to launch in the next few months.

Sinclair Broadcast Group has approached Tribune Media (NYSE:TRCO) for discussions about combining the companies, Reuters reports. Such a tie-up would create a sizable local broadcast station owner, with a combined market cap of about $6.6B. Aside from a straight merger, Sinclair (NASDAQ:SBGI) could be interested in parts of Tribune, such as its CW stations or the WGN America cable network. TRCO +4.5% premarket.

Tuesday's Key Earnings

Cheniere Energy (NYSEMKT:LNG) -1.8% missing earnings estimates.
Etsy (NASDAQ:ETSY) -4.4% AH following a Q4 loss.
Palo Alto Networks (NYSE:PANW) -20.4% on weak guidance.
Salesforce (NYSE:CRM) -1.4% AH giving a soft outlook.
Seadrill (NYSE:SDRL) -14.2% after a Chapter 11 warning.
Target (NYSE:TGT) -12.2% plagued by its brick-and-mortar model.
Valeant Pharmaceuticals (NYSE:VRX) -13.9% cutting guidance.

Today's Markets 

In Asia, Japan +1.4%. Hong Kong +0.2%. China +0.2%. India +0.8%.
In Europe, at midday, London +0.9%. Paris +1.4%. Frankfurt +1.3%.
Futures at 6:20, Dow +0.4%. S&P +0.5%. Nasdaq +0.6%. Crude +0.2% to $54.12. Gold -0.7% to $1244.70.
Ten-year Treasury Yield +7 bps to 2.43%

Today's Economic Calendar

Auto Sales
7:00 MBA Mortgage Applications
8:30 Personal Income and Outlays
8:30 Gallup U.S. Job Creation Index
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
2:00 PM Fed's Beige Book
6:00 PM Fed's Reserve Gov. Lael Brainard speech

Companies reporting earnings today »

Source: http://seekingalpha.com/article/4050881-wall-street-breakfast-snap-pricing-stage-tonight

Wall Street Breakfast: Snap IPO On The Horizon

Includes: ABX, AMAT, BA, CBS, CSCO, ETSY, FOX, FOXA, FXCOF, GRPN,

Snap Inc. sees its upcoming initial public offering priced at between $14 and $16 per share, according to new regulatory filings. That could value the owner of ephemeral messaging app Snapchat at $19.5B-$22.2B, near the low end of what the company had earlier targeted. The stock could get a final price as soon as March 1 and begin trading the following day on the NYSE under the ticker "SNAP."

Economy

Two days of testimony from a more hawkish Janet Yellen has cemented the idea that the U.S. central bank will raise interest rates by midyear if not sooner. Yellen also said she opposes an intrusion on the Fed's independence after House Financial Services Committee Chairman Jeb Hensarling announced a plan to include congressional audits of interest rate policy. "It would result in poor economic performance," she said during the hearing.

With his confirmation looking increasingly imperiled, Labor Secretary nominee Andy Puzder has taken his hat out of the cabinet ring. The CEO of CKE Restaurants was at the center of a swirl of controversies, complaints and potential conflicts. Reports also suggest President Trump has offered his vacant national security adviser post to Vice Adm. Robert Harward, a former Navy SEAL and deputy commander of U.S. Central Command.

President Trump hosted Israeli Prime Minister Benjamin Netanyahu at the White House yesterday, in their first talks since he took office. At a joint press conference, Trump asked Netanyahu to "hold back on settlements for a little bit," but stopped short of committing to a two-state solution, declaring his support for a peace agreement that both sides "like the best."

A three-week-old scandal may have cost conservative Francois Fillon his status as favorite to win the French presidency. The country's financial prosecutor announced today that a case involving €830K in taxpayers' money - brought against his wife for a "fake job" as her husband's parliamentary assistant - will remain open. The first round of the election is less than 10 weeks away.

Free trade deal resurrection? The European Parliament has approved a landmark global trade pact with Canada, backing the Comprehensive Economic and Trade Agreement by a vote of 408-254. Parts of the deal, such as tariff reduction, will come into force immediately, while more controversial aspects, such as the investor court system, will require ratification by EU member states.

Stocks

A South Korean judge questioned Samsung Group (OTC:SSNLF) leader Jay Y. Lee and another executive behind closed doors today to decide whether they should be arrested over their roles in a corruption scandal that has engulfed President Park Geun-hye. The same Seoul court rejected a request for a warrant in January, but a spokesman said it had since expanded the charges to include hiding the proceeds of a criminal act.

According to CNBC, Toshiba (OTCPK:TOSYY) may delay the sale of its prized flash-memory chip unit after the conglomerate said it would consider selling most, even all, of the marquee business. Loosening the deadline would ease concerns about trying to hurry any antitrust reviews, increasing the number of potential buyers and improved offers. Among the possible bidders: MU, WDC, OTC:FXCOF, OTC:HXSCF and Bain Capital.

Production workers at Boeing's South Carolina plant have overwhelmingly voted not to join the Machinists, maintaining southern reluctance toward unionization. It was a high-profile test for organized labor in the nation's most anti-union state. The plant will get additional attention this week as President Trump visits the facility on Friday to mark the completion of the first 787-10, Boeing's (NYSE:BA) newest version of the Dreamliner.

"In most states and cities, there are no rules about driverless cars," said UBER's Emil Michael, explaining why the company doesn't always know who's going to be welcoming until after it puts test vehicles on the road. "Relationships are hard sometimes, so you have to invest in a lot of them," he added, citing the need to find more "friendly cities" and get more "real road miles to make the thing work."

Organic growth of 3.2% for 2016 was at the high end of the industry, but "there is no beating around the bush - it came in lower than we expected," said Nestle's (OTCPK:NSRGY) new CEO Ulf Mark Schneider. It was the fourth straight year Nestle had missed its 5-6% growth objective, known as the "Nestle Model." As a result, the company is stepping up "restructuring" and cutting its sales growth target to 2-4% for 2017.

Kombucha drinkers (or brewers) rejoice! Colorado lawmakers have introduced the KOMBUCHA Act in Congress, which would increase the tax limit on drinks from 0.5% ABV to 1.25%, making it exempt from federal alcohol tax and regulation. The trendy fermented tea is a growing industry, with an economic impact of $600M expected to be worth $1.8B by 2020. Related tickers: PEP, HAIN, SBUX, WFM, OTC:PUSH

Twitter's jump into live events has largely been about sports, but Sunday night's Grammy Awards attracted more viewers than any NFL game. Some 5.1M people tuned into the event, a number topped only by the presidential election and Donald Trump's inauguration. Twitter (NYSE:TWTR) plans to double the amount of live programming it shows in 2017, as it attempts to boost engagement in a highly competitive online media world.

Shareholders of Time Warner have approved the company's $86B takeover by AT&T (NYSE:T). The OK came with 78% of outstanding shares in favor, and 99% of shares voted, but tough regulatory aprovals are seen ahead. The mega-merger would pair entertainment creators such as HBO, CNN and Warner Bros. (NYSE:TWX) with AT&T's wired and wireless networks and DirecTV.

Verizon's discount on its $4.8B deal to acquire Yahoo (NASDAQ:YHOO) may amount to as much as $300M, WSJ reports. It follows weeks of tense talks after a pair of massive data breaches were revealed by Yahoo, affecting 500M and 1B users respectively. If the revision is quickly agreed to, Verizon's (NYSE:VZ) deal could close in April - though an SEC probe into the breaches could still slow that timeline.