Kicking off the year, Amazon.com, Trade Desk, and Meta Platforms are top picks within the internet sector, one Wall Street team says.
“We’re updating our thoughts as we enter 2024 and revise our digital advertising growth expectations for the year (see digital growth +8.0% y/y vs. +7.2% y/y prior), we still expect a modest environment for e-Commerce (although easing inflation doesn’t hurt), and our subscription group is a mixed bag,” Stifel analysts led by Mark Kelley wrote in a Monday report.
The team highlighted a few things they’re paying attention to regarding the stock trio. For Amazon, points to watch include margin improvement, and new advertising formats. For the digital marketing company Trade Desk, Stifel is focused on continued market-share gains, while for Meta, it is looking at Reels, its short-video platform, and Advantage+, an artificial intelligence initiative for advertisers.
Stifel rates all three stocks at Buy. It lifted its price targets on Amazon and Trade Desk to $175 from $173 and to $80 from $79, respectively, while maintaining its $405 price target on Meta.
Amazon was 0.7% lower to $148.13 in premarket trading, while Trade Desk was flat at $69, and Meta dipped 0.4% to $357.13. Futures on the S&P 500 were 0.6% lower.
Stifel isn’t alone in its optimism on the trio.
Earlier this month, BofA Securities underlined Amazon’s opportunity for an uptick in advertising revenue growth stemming from the coming addition of ads to Prime Video. Also in January, Dan Niles, who runs the Satori Fund, a tech-focused hedge fund, said the election year should lift Meta’s ad volumes.
That dovetails into why Trade Desk has garnered approving nods from Wall Street. It too stands to gain from the surge in advertising elections bring, Barron’s reported in December.