Technology

6 Top SunTrust Internet and Digital Media Stock Picks for 2019

Facebook solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

Despite the terrible earnings results posted last year and other negatives that caused the shares to sell off a massive 43%, Facebook is used by some 60% of small businesses, which utilize the company’s advertising platform in some way for their businesses. The ability to grow that number is a huge positive for the beleaguered social media giant.

SunTrust said this regarding the future of the company:

We remain constructive as we believe 1) Facebook’s user base/ engagement proved steady in the face of much head winds, 2) prioritization of the user experience/safety should lead to better monetization long term as marketers adopt the new ad products, 3) marketers continue to see superior return on investment, 4) Stories seeing increasing levels of engagement, 5) our belief there is some conservatism in mgmt commentary, and 6) valuation remains compelling.

The $200 SunTrust price target is well above the $185.28 consensus target. Shares closed at $147.54 on Wednesday.

Expedia

This is online travel leader is poised for a potentially big 2019. Expedia Inc. (NASDAQ: EXPE) is the leading internet travel pure-play with exposure to online travel in the United States, Europe and Asia. The company’s portfolio of brands includes Expedia, Orbitz, HomeAway, Travelocity, Hotels.com, Trivago, Egencia, Hotwire, Wotif, Venere and Classic Vacations.

Top analysts see it as a story of improving execution, and they also think that the company is starting to finally match Priceline’s growth metrics. The company has raised the dividend and is buying back stock, and both are shareholder-friendly actions. SunTrust noted this when discussing the company’s positive activities:

Expedia’s ongoing investments into expanding property selection in focus markets should contribute positively to growth in room nights, bookings and revenue. Overtime, we see room for better marketing efficiency in these markets as well from efficient customer acquisition.

Expedia investors receive a 0.9% dividend. SunTrust has set its target price at $180. The consensus price target is $146.38, and the stock closed Wednesday at $116 a share.

GoDaddy

This company is probably the most well-known for constructing websites. GoDaddy Inc. (NYSE: GDDY) is a technology provider to small businesses, web design professionals and individuals. It delivers cloud-based products and personalized customer care. The company operates a domain marketplace, where its customers can find the digital real estate that matches their idea. And it provides website building, hosting and security tools to help customers construct and protect online presence.

GoDaddy provides applications that enable connecting to customers and managing businesses. The company also provides search, discovery and recommendation tools, as well as a selection of domain names for ventures. It provides productivity tools, such as domain-specific email, online storage, invoicing, bookkeeping and payment solutions to run ventures, as well as marketing products.

SunTrust team likes how the shares to hold up in rocky times:

The subscription nature of the business model and the “utility-like” service provided to small businesses make GoDaddy’s business relatively resilient in a macro-economic slowdown, in our view.

The SunTrust price objective is $87. The consensus target is $83.80, and shares were last seen at $63.42.

IAC/InterActiveCorp

This is another top SunTrust pick with big upside to the firm’s target price. IAC/InterActiveCorp (NASDAQ: IAC) operates a diverse collection online media assets ranging from search to personals, with Ask.com and Match.com driving the bulk of its revenue and profits. IAC generates revenue from a combination of advertising (both search and display), subscriptions and transactions.

The 2017 merger between Angie’s List and Home Adviser, IAC’s home services marketplace, was well received. SunTrust is very positive on the company and noted this:

Our positive stance is predicated on an attractive sum of the parts analysis reflecting strong top and bottom line growth at both Angie’s List and Match.com, strong free-cash-flow generation in the Publishing and Applications segments and prospects for upside from smaller businesses being currently incubated.

The $237 SunTrust price target is near the consensus target of $237.82. The stock closed most recently at $190.12.

These are three mega-cap industry leaders and three somewhat smaller plays for investors that feel that the internet remains the ubiquitous ruler of today and tomorrow. While much better suited for aggressive growth accounts, they all offer solid entry points with the market still down from highs set back in the fall.