Citi Raises Targets Amazon, Facebook, Priceline, eBay

The internet sector was a major winner throughout 2017 and some Wall Street analysts are expecting more of the same in 2018.

Citi's Mark May maintained a Buy rating on the following stocks, with price targets revised higher:

Amazon

A high growth profile in a high margin business (AWS, advertising, etc) bodes well for Amazon's retail business is valued only at 2.9x gross profit versus 3.2x for traditional domestic retailers.
2018 should see Amazon expand into newer categories like healthcare and pharmaceutical.
Margins are now expected to expand in 2018 after declining in 2017.
Amazon's tax rate stands at 37 percent and the company could see the "most direct impact" from the recent tax reform.

eBay

eBay's core U.S. Marketplace Transaction revenue growth has improved from 0 percent in 2015 and negative 1 percent in 2016 to positive 8 percent for 2017.
eBay's growth is "modest" at just 5 to 10 percent, but its valuation is also "relatively low" at current levels.
eBay could benefit from changes to the corporate tax structure as it has a high effective rate in the U.S.

Facebook

2018 will likely prove to be an "up year" for the entire ad market from the World Cup, Winter Olympics, and U.S. midterm election.
A premium video offering could prove to be "materially positive" and accretive to earnings.

Priceline

Priceline's recent slump in room night growth from 25-30 percent to around 20 percent is due to the company's pullback of inefficient marketing channels and tougher comps rather than any secular issue.
Growth rates should stabilize in 2018.
A decision to cut back on marketing spend could prove to be a tailwind to margins.

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