New Street starts Big Tech, sees over 50% upside in its Top Pick Amazon

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By Senad Karaahmetovic

New Street Research initiated research coverage of several U.S. Internet stocks with 5 Buy ratings and 2 Neutrals.

While the ‘FANG trade’ may be dead, according to New Street analysts, the sector offers several attractive opportunities after a pullback in 2022. The analysts expect better returns in 2023 as headwinds are expected to ease throughout the year.

New Street sees three big themes dominating the U.S. internet sector in 2023 - recession appears priced in; TAM for digital ads is much larger than the market sees it; and eCommerce, streaming, and dating are ready to accelerate.

As far as individual stocks are concerned, Amazon (NASDAQ:AMZN) is the Top Pick in the sector as the analysts see an upside potential of almost 55%. They start with a Buy rating and a $130 per share price target.

“We see AMZN beginning to gain eCommerce share again exiting 2023 as it takes advantage of a massive expansion of logistics and fulfillment investment from 2019-2022. We expect higher operating leverage and margin upside, supported by the continued revenue mix shift to higher margin businesses (lead by Amazon Web Services and advertising),” the analysts wrote in an initiation note.

Elsewhere, Match (NASDAQ:MTCH) is the Top SMID Pick, while Alphabet (NASDAQ:GOOGL), Meta (NASDAQ:META), and Snap (NYSE:SNAP) are also Buy-rated. On the other hand, Netflix (NASDAQ:NFLX) is initiated at Neutral, as well as The Trade Desk (NASDAQ:TTD).