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Internet-sector investors have some new opinions to chew on.
Needham’s new internet analyst, Bernie McTernan, this morning launched coverage on a dozen consumer-focused internet stocks, with a particular focus on ride sharing, travel, online gaming, web-based real-estate services, and web-site services. He is generally keen on most of them, with a preference for online-gaming plays, and some reticence on the “iBuyer” real-estate segment in the current red-hot real-estate market.
McTernan joined Needham in March after a two-year stint at Rosenblatt Securities.
Here’s a run down on his calls:
Ride Sharing:
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(ticker: UBER): Buy rating, $77 target price: “We see the potential for the move up the adoption curve in delivery during the pandemic to be sticky and look for Uber to benefit from its expansion into other verticals like grocery and alcohol, where recent acquisitions should help drive share quickly.”
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(LYFT): Hold. “We view Lyft as a good company with secular tailwinds but a stock that is properly valued, as five months into the reopening trade, Lyft’s multiple is back at its peak.”
Online gambling:
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(DKNG): Buy, $81 target. “A leader in the emerging North America online gambling market…we see the currently regulatory environment as supportive.”
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(PENN): Buy, $151 target. “We are bullish on the online sports betting and iGaming [market] in the U.S. and see the potential for Penn to take significant, profitable market share.”
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(RSI): Buy, $22 target. “The iGaming market [online casino gaming] on a per-capita basis is on track to be significantly larger than on-line sports betting, however the legislative environment has not been as supportive. We like Rush Street’s positioning as an iGaming-first provider.”
Food and travel:
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(DASH): Buy, $175 target. “We expect DoorDash to leverage its leadership position in restaurant delivery, likely solidified by the pandemic, to become one of the leading, horizontal, on-demand, last-mile fulfillment providers in North America.”
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(ABNB): Buy, $210 target. “We like Airbnb’s strategic positioning as a share-taker in the large, online-travel market. The company’s unique, high-quality platform resonates with customers, leading to a powerful network effect.”
Real estate:
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(RDFN): Hold. “Over the last 6-12 months the housing market has been supportive for all participants, however given today’s supply and demand imbalance we have concerns on how long this can last. While the stock’s revenue multiple has retreated from its highs, it remains elevated.”
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(Z): Hold. “We think the convenience/certainty will drive adoption of iBuying over time, but are less certain near term, given the supply-and-demand imbalance in the housing market.”
Internet services:
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(FVRR): Buy, $260 target. “Fiverr has carved out a leadership position in the nascent offline-to-online shift happening in the freelancer market, and is putting the mechanisms in place to move upmarket.”
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(WIX): Buy, $340 target: “While the pandemic was a benefit to Wix, the company will extend its strong track record of keeping and growing revenue from its base. We look for…Wix Payments to grow as a percentage of overall revenues, and think that its success will lead to multiple-expansion.”
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(SSTK): Buy, $105 target. “We expect Shutterstock to enjoy a tailwind from the reopening of the economy as advertising budgets grow.”
Of the dozen stocks, 10 are trading higher on Tuesday, led by a 5% jump in Penn Gaming, and a 4.9% rally in
is off 5%, while Zillow is down fractionally.
Write to Eric J. Savitz at eric.savitz@barrons.com
