A Lack Of Fundamental Catalysts Led To Internet Group's Underperformance Last Week

The internet group delivered a lackluster performance last week, versus the broader market, mainly due to “a lack of fundamental catalysts,” Cantor Fitzgerald’s Youssef Squali. He added that the most notable news was Facebook Inc FB's global launch of Messenger Day to combat Snap Inc SNAP.

Squali mentioned the top picks as Facebook, Alphabet Inc GOOG GOOGL, Amazon.com, Inc. AMZN and Expedia Inc EXPE. Along the smaller-cap stocks, the analyst prefers Shutterfly, Inc. SFLY, Acxiom Corporation ACXM and Yelp Inc YELP.

Group Underperforms

“The Cantor Internet Index underperformed the broader market for the week ended March 8,” Squali wrote. The index was down 1.7 percent, versus a 1.4 percent decline in the S&P 500. Year-to-date, the index has risen 3.5 percent, versus a 5.6 percent gain in the S&P 500.

Messenger Day

Facebook’s globally rolled out Messenger Day, which allows users to take photos and videos, apply filters and post items for viewing for 24 hours, after which the post disappears.

“We view the rollout as an attempt by Facebook to offer new features in order to grow engagement without having users turn to alternatives such as Snap, which has built up an engaged user base by offering innovative features and disappearing content,” Squali commented.

Other News

• Intensifying competition for local commerce: Amazon announced that its Prime Now service will add delivery from local stores in the San Francisco Bay area. “We expect Prime Now to continue to expand local merchant participation across all geos in order to increase the customer value proposition and gain share of local commerce,” the analyst said.
• Google Cloud Next 2017: The event suggested that Google’s aggressive push to increase its share of cloud would continue.
• Shutterstock collaborates with Amazon: This is “an incremental positive,” although it will not impact Shutterstock’s near-term results.

Ratings And Price Targets

• Acxiom — Overweight, $33
• Alphabet — Overweight, $1,040
• Amazon — Overweight, $965
• Expedia — Overweight, $175
• Facebook — Overweight, $175
• Shutterfly — Overweight, $50
• Yelp — Overweight, $46

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