In a report published Monday, Morgan Stanley analyst Scott Devitt lowered the Internet industry sector view to In-Line.
Devitt noted that the Outperformance of this sector was driven by multiple expansion over positive estimate revisions. Morgan Stanley commented "We believe that growth needs to accelerate to justify recent performance, the absence of which could lead the group multiple to revert to the mean." The analyst warned investors that trading on strong TAM opportunity can face strong pullbacks.
Devitt maintains the Overweight rating on Google GOOG, but removed the company from Morgan Stanley's Best Idea List. The analyst continues to favor larger names with "attractive growth" including Amazon.com Inc. AMZN, eBay Inc. EBAY, Facebook, Inc. FB, LinkedIn Corporation LNKD, priceline.com Incorporated PCLN, and Google. Devitt further recommends Groupon, Inc. GRPN and Pandora Media, Inc. P. Morgan Stanley is bearish on companies including Zynga, Inc. ZNGA, WebMD Health Corp. WBMD, and OpenTable, Inc. OPEN.
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