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Technology

Canaccord’s Take on Facebook, Amazon, Netflix, Google

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Canaccord’s Michael Graham sees a great buying opportunity in FANG stocks, after their recent sell-offs

Shares of Facebook Inc. (NASDAQ:FB), Amazon.com, Inc. (AMZN), Netflix, Inc. (NFLX), and Alphabet Inc. (GOOGL) have plummeted in recent weeks, due to outperformance of energy and financial sector, particularly after the election of Donald Trump. Given these movements in the market, Canaccord Genuity believes that the aforementioned stocks present a great buying opportunity for investors. Analyst Michael Graham maintained his Buy rating on all the stock in a research note published today Facebook Mr. Graham believes that Facebook’s valuation is quiet reasonable, and expects the company’s main social media platform and Instagram to continue carry on with strong fundamental growth through the next year. The analyst highlighted that there is a common belief to be concerned about, but he thinks it can be compensated with Instagram’s performance and pricing. Though, the research firm believes that investors’ focus on GAAP earnings per share (EPS) is a potential headwind for the stock; it has negatively responded to initial expense growth guidance over the last three years. Amazon Regarding Amazon, Canaccord thinks investments in India and the Prime Flywheel currently put weight on margins, with merely half of the investors worried about future growth. Last month, the online retailer announced another major price cut at Amazon Web Services (AWS) and Mr. Graham views this along with tough comparables as big concerns. He believes that the first quarter of 2017 (1QFY17) guidance will be affected due to these factors. Netflix While most of the analysts think that Netflix’s valuation is “untenable,” Mr. Graham feels that the stock has a significant potential downside on the back of negative media coverage. While he remains bullish on the stock over the long term, he does expect the 1QFY17 guidance to be “overly conservative,” due to strong year-over-year (YoY) comparables. The investment firms highlighted that Netflix’s plans to ramp up original programming will create a competitive edge, but most investors believe otherwise. Google Canaccord remains positive on Google’s shares due to banking, short-term fundamentals, mobile, and YouTube. Mr. Graham sees the search giant’s approach of not revealing guidance as a favorable for the stock. He expects the gross margin’s degradation to be compensated by website growth.

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