Longtime web analyst Mark Mahaney has a new gig at Evercore ISI, the place on Monday he and his staff launched protection of three dozen shares.
Mahaney, who previously spent more than eight years at RBC Capital, and earlier than that 7-plus years at Citigroup, writes that his high-level view is that after materially outperforming the market in 2020, the sector is prone to see some “consolidation” within the short-run, with pockets of outperformance as buyers look forward to 2022. He’s inspired by what he thinks can be $Four trillion in incremental spending in on-line retail, journey and promoting between by 2025 attributable to “ongoing digital disintermediation” of offline companies.
He thinks the market usually under-appreciates “the permanent pull-forward of demand and the attending scale benefits that the Covid crisis created for several of the leading Internet platforms.” But he provides that “very robust multiples across the sector keep us near-term pragmatic and selective.”
Mahaney and his staff began protection of 36 shares – that features 22 with Outperform rankings, and 14 with In Line rankings. In the 90-page presentation reviewing his considering on the sector, Mahaney lists 9 prime picks.
Among mega caps, his decisions are
(the topic of a bullish cover story on this week’s Barron’s print version),
and Uber. His large-caps favorites embrace Spotify,
and Zillow. His prime decisions amongst smaller shares -include Wix, StichFix and GoodRx.
Here briefly are his ideas on every:
(Ticker: FB): He sees a $1 trillion-plus whole addressable promoting market, and notes that the social media large has 4 of the preferred apps globally in Facebook, Instagram, Messenger and WhatsApp. He sees “dramatic new monetization opportunities” in WhatsApp, Reels, Marketplace and Social Commerce. “We believe Facebook has a number of properties that are under-monetized relative to their usage,” he writes. “Marketplace for example, could generate up to $3 billion in 2024 revenue,” he writes. His goal worth is $370.
(AMZN): Mahaney sees large potential goal markets in retail, cloud, promoting, third-party gross sales and pharmacy. He thinks Amazon has “the best mix shift story in tech,” with quicker rising segments – promoting and cloud – providing increased margins than retail. He additionally thinks Amazon has “the best management team in tech.” And he notes that the inventory is buying and selling modestly beneath historic multiples. Target: $4,000.
(UBER): The analyst notes that Uber has main positions in almost each worldwide experience sharing market – and fairness stakes within the main gamers in China, Russia and components of Southeast Asia. And he notes that they’re the biggest participant in meals supply exterior China. He thinks Uber will see a robust post-Covid restoration in experience sharing – with meals supply “a structural winner” from the pandemic. He likes Uber over Lyft for its worldwide publicity, better diversification and bigger scale. Target: $74.
(SPOT): He notes that the inventory is down greater than 20% from its current peak, whereas “clearly the world’s largest audio streaming provider.” He additionally factors out that Spotify boosted costs in some markets, which he thinks ought to stabilize common income per person and will result in increased income development. Target: $360.
(PINS): Mahaney sees the corporate as “a structural winner from Covid with permanent pull forward of ad budgets online.” He additionally famous that “Pinterest is in the middle of an ad product inflection point,” with new instruments and advert codecs, that make it “one of the best plays on social commerce.” Target: $97.
(ZG): He thinks the net actual property firm is a “structural winner from Covid” given doubtless everlasting adoption of do business from home by many and a pickup in dwelling gross sales. And Mahaney thinks the corporate is nearing break-even on its iBuyer enterprise. Target: $179.
(WIX): Mahaney thinks this supplier of web site software program for small companies can be a structural winner from the pandemic, with a market share edge over rivals like Squarespace and GoDaddy. He sees a increase from new providers, like funds. Target: $370.
(SFIX): He sees a restoration play as individuals restock their wardrobes as they start to renew out-of-home actions. Revenue will speed up each this 12 months and subsequent 12 months – with a specific increase from a deliberate transfer into Direct Buy gross sales, he says. Target: $78.
(GDRX): The pharmacy info supplier will profit because the financial system reopens and doctor and pharmacy visits rebound from 2020 ranges. “We see GoodRx as the clear market leader in the prescription discount cards space,” he writes. Target: $50.
Write to Eric J. Savitz at firstname.lastname@example.org