Meta Platforms (FB)
Facebook’s name change to Meta Platforms in October is one of the big reasons why everyone seems to be talking about the metaverse these days. But its bread-and-butter business — social media — is still firing on all cylinders.
In Q3 of 2021, Facebook’s monthly active users grew 6% year over year to 2.91 billion. Factoring in Meta’s other platforms — namely Instagram, Messenger and WhatsApp — the number of active users on at least one product totaled 3.58 billion.
Jefferies has a buy rating on Meta and a price target of US$420, implying potential upside of about 26%.
Meta is “one of the best fundamental stories in online advertising, producing consistent best-in-class ROI for marketers,” writes Jefferies.
Jefferies likes what Meta is doing in the virtual reality space, too.
“Oculus rose to the No. 1 most downloaded app in the App Store on Christmas Day, providing a clear indication that VR adoption is more mainstream than previously thought,” says the investment bank.
Shares of Meta are up 35% over the past year.
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As the parent company of Google, Alphabet is already an internet behemoth, commanding a market cap of over US$1.8 trillion. But Jefferies believes it can get even bigger.
The investment bank has a buy rating on the company and a price target of US$3,500. With Alphabet shares currently trading at around $2,790, Jefferies’ forecast suggests a potential upside of around 25%.
Jefferies likes Alphabet’s solid fundamentals, such as strong digital ad demand, a booming cloud segment and “healthy and expanding” operating margins.
In Q3 of 2021, Alphabet earned US$65.1 billion in revenue, representing a 41% increase year over year.
Growth was across the board. Google’s advertising revenue surged 43% year over year to US$53.1 billion. Youtube ads brought in US$7.2 billion of revenue, up from US$5.0 billion a year ago. Meanwhile, revenue from Google Cloud rose 45% to US$4.99 billion.
Despite some recent sluggishness, the stock is up 60% over the past 12 months.
Trade Desk (TTD)
Trade Desk is a much smaller name compared to Meta and Alphabet, but it could be one of the bigger opportunities in the internet space.
The Calif.-based tech company offers a cloud-based platform that allows digital ad buyers to create, manage and optimize digital advertising campaigns across different ad formats and devices.
Jefferies says that Trade Desk is the best pure-play stock to capitalize on the shift to programmatic advertising, pointing to its “deep relationships and a scalable business model.”
Business has been firing on all cylinders. In Q3 of 2021, Trade Desk brought in US$301.1 million of revenue, marking a 39% jump year over year. Adjusted earnings came in at US$0.18 per share for the quarter, up from US$0.13 per share in the year-ago period.
Notably, the company’s customer retention rate has stayed above 95% over the past seven years.
Trade Desk shares are down slightly over the past year. But Jefferies sees major upside ahead.
It recently upgraded the stock from hold to buy and raised its price target on the company from US$100 to US$105, representing 40% worth of upside from current prices.
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