Pacific Crest Chooses Criteo, LinkedIn, HomeAway and Google Among Internet Companies

Pacific Crest's Evan Wilson released a cautious note on ad-driven Internet companies over the weekend, noting that he expects the "tough stretch of earnings reports" to continue into Q2. Wilson said that "the overarching trend of decelerating user growth is worrisome relative to expectations" and that the "biggest risk are margins."

Wilson said that the companies with "the most exposure" are Angie's List Inc ANGI, Tripadvisor Inc TRIP, Yelp Inc YELP, and Zillow Group Inc Z.

Conversely, one of the firm's "top ideas" continues to be Criteo SA CRTO. In the next earnings report, Wilson said that the company should beat expectations and raise guidance on the back of higher marketing spend from e-commerce and travel companies. Criteo has already gained nearly 30 percent year-to-date, though Wilson said that the price could rise to $65 (another 24 percent) in the next year.

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Wilson also highlighted LinkedIn Corp LNKD, HomeAway, Inc. AWAY and Google Inc GOOGL as Internet stars. For LinkedIn, last quarter's disappointing results have instead de-risked this quarter for Pacific Crest. Therefore, LinkedIn is set up "well for the rest of the year and into a promising 2016." Wilson said LinkedIn should also beat forecasts and raise 2016 expectations.

Wilson reiterated optimism on HomeAway's long-term prospects, but said that "it's still a work in progress." Despite "choppy" prior financial results, Pacific Crest said that this quarter should stabilize, with in-line results and 2016 guidance reiterated.

Wilson said that Google will see "mixed results," a continuation of the prior quarter. The next earnings report will also be the first for Google's new CFO, and Wilson said that her words will be "closely followed." However, "expectations are low enough" that it makes for a solid risk/reward setup to reach Wilson's $675 price target.

Of the final three choices, Google has performed the best this year, gaining 6.7 percent. HomeAway rose 4 percent, while LinkedIn fell nearly 8 percent.