Views:+1: Expected Price Gains for Internet Stocks (GOOG, YHOO, AOL, BIDU, DMD, LNKD, MWW, RATE, TST)
As
the internet has developed over the past 15 years or so, a variety of
business models have appeared — and some have disappeared. Revenue
models are also different, running from advertising to subscription to
content provider types. The dominant revenue model is advertising and
the leaders there are Yahoo! Inc. (NASDAQ: YHOO) in display advertising
and Google Inc. (NASDAQ: GOOG). AOL Inc. (NYSE: AOL) and China’s Baidu
Inc. (NASDAQ: BIDU) are other major ad driven sites.
LinkedIn Corp. (NASDAQ: LNKD) and Monster World Wide Inc. (NYSE: MWW)
depend on subscriptions for revenue, while Demand Media Inc. (NYSE:
DMD), Bankrate, Inc. (NYSE: RATE) and TheStreet, Inc. (NASDAQ: TST)
provide original content surrounded by advertising.In addition to these
publicly traded stocks the internet space also includes social
networking company Facebook, social game company Zynga, and coupon site
Groupon. The latter two have filed for IPOs and both are expected to
come public as soon as next month.All financial data from Yahoo!
Finance, unless noted otherwise.
Google Inc. (NASDAQ: GOOG) has a median target price of $727.50 from 30 brokers. Shortly after noon today, shares are trading today at $587.87, for an implied gain of $139.63, or 24%. Google’s forward P/E is 13.45 and the company does not pay a dividend. The stock’s 52-week trading range is $473.02-642.96, and at today’s price that’s about 24% above its 52-week low, posted earlier this morning, and 9% below the 52-week high. Google reaps nearly $10 billion a quarter in advertising revenues. Only a relatively small portion of that is mobile advertising, but as Google’s best selling Android mobile operating system continues to spread, the mobile ad revenue could continue its triple-digit growth rate for some time to come.
Yahoo! Inc. (NASDAQ: YHOO) has a median target price of $18.00 from 23 brokers. Shortly after noon today, shares are trading today at $16.33, for an implied gain of $1.67, or 10%. Yahoo’s forward P/E is 18.55 and the company does not pay a dividend. The stock’s 52-week trading range is $11.09-$18.84, and at today’s price that’s about 47% above its 52-week low, posted earlier this morning, and 13% below the 52-week high. Yahoo recently fired its CEO and is currently exploring strategic options. Much of the company’s value resides in its nearly 40% share in China’s Alibaba e-commerce site. The stock price is relatively high on the belief that the company will find a buyer willing to pay a premium.
AOL Inc. (NYSE: AOL) has a median target price of $17.00 from 15 brokers. Shortly after noon today, shares are trading today at $14.38, for an implied gain of $2.62, or 18%. AOL’s forward P/E is 84.65 and the company does not pay a dividend. The stock’s 52-week trading range is $10.06-$27.65, and at today’s price that’s about 43% above its 52-week low, posted earlier this morning, and 48% below the 52-week high. AOL recently purchased the Huffington Post properties, which gave the company something of a boost. The high forward P/E speaks volumes about prospects for future earnings. AOL, like Yahoo, is probably over-priced.
Baidu Inc. (NASDAQ: BIDU) has a median target price of $191.00 from 26 brokers. Shortly after noon today, shares are trading today at $127.89, for an implied gain of $63.11, or 49%. Baidu’s forward P/E is 29.11 and the company does not pay a dividend. The stock’s 52-week trading range is $94.33-$165.96, and at today’s price that’s about 36% above its 52-week low, posted earlier this morning, and 23% below the 52-week high. Baidu’s great advantage is that it is the largest and fastest growing internet company in the world’s most populous country. Sheer numbers are on Baidu’s side for now and for several years to come. The forward P/E may indicate an overpriced stock, but its stock price is still nearly $35/share below its target price. There’s plenty of room for this one to run.
Demand Media Inc. (NYSE: DMD) has a median target price of $15.00 from 10 brokers. Shortly after noon today, shares are trading today at $6.47, for an implied gain of $8.53, or 132%. Demand Media’s forward P/E is 16.97 and the company does not pay a dividend. The stock’s 52-week trading range is $5.24-$27.38, and at today’s price that’s about 23% above its 52-week low, posted earlier this morning, and 76% below the 52-week high. Demand Media was hit hard by a change earlier this year to Google’s search algorithm and the company hasn’t recovered. The target price here is too high, and the company continues its arguable accounting practice of capitalizing content creation costs and amortizing them over five years. The effect of that practice is to spread costs over a long period, making the company look more profitable than it may be.
Google Inc. (NASDAQ: GOOG) has a median target price of $727.50 from 30 brokers. Shortly after noon today, shares are trading today at $587.87, for an implied gain of $139.63, or 24%. Google’s forward P/E is 13.45 and the company does not pay a dividend. The stock’s 52-week trading range is $473.02-642.96, and at today’s price that’s about 24% above its 52-week low, posted earlier this morning, and 9% below the 52-week high. Google reaps nearly $10 billion a quarter in advertising revenues. Only a relatively small portion of that is mobile advertising, but as Google’s best selling Android mobile operating system continues to spread, the mobile ad revenue could continue its triple-digit growth rate for some time to come.
Yahoo! Inc. (NASDAQ: YHOO) has a median target price of $18.00 from 23 brokers. Shortly after noon today, shares are trading today at $16.33, for an implied gain of $1.67, or 10%. Yahoo’s forward P/E is 18.55 and the company does not pay a dividend. The stock’s 52-week trading range is $11.09-$18.84, and at today’s price that’s about 47% above its 52-week low, posted earlier this morning, and 13% below the 52-week high. Yahoo recently fired its CEO and is currently exploring strategic options. Much of the company’s value resides in its nearly 40% share in China’s Alibaba e-commerce site. The stock price is relatively high on the belief that the company will find a buyer willing to pay a premium.
AOL Inc. (NYSE: AOL) has a median target price of $17.00 from 15 brokers. Shortly after noon today, shares are trading today at $14.38, for an implied gain of $2.62, or 18%. AOL’s forward P/E is 84.65 and the company does not pay a dividend. The stock’s 52-week trading range is $10.06-$27.65, and at today’s price that’s about 43% above its 52-week low, posted earlier this morning, and 48% below the 52-week high. AOL recently purchased the Huffington Post properties, which gave the company something of a boost. The high forward P/E speaks volumes about prospects for future earnings. AOL, like Yahoo, is probably over-priced.
Baidu Inc. (NASDAQ: BIDU) has a median target price of $191.00 from 26 brokers. Shortly after noon today, shares are trading today at $127.89, for an implied gain of $63.11, or 49%. Baidu’s forward P/E is 29.11 and the company does not pay a dividend. The stock’s 52-week trading range is $94.33-$165.96, and at today’s price that’s about 36% above its 52-week low, posted earlier this morning, and 23% below the 52-week high. Baidu’s great advantage is that it is the largest and fastest growing internet company in the world’s most populous country. Sheer numbers are on Baidu’s side for now and for several years to come. The forward P/E may indicate an overpriced stock, but its stock price is still nearly $35/share below its target price. There’s plenty of room for this one to run.
Demand Media Inc. (NYSE: DMD) has a median target price of $15.00 from 10 brokers. Shortly after noon today, shares are trading today at $6.47, for an implied gain of $8.53, or 132%. Demand Media’s forward P/E is 16.97 and the company does not pay a dividend. The stock’s 52-week trading range is $5.24-$27.38, and at today’s price that’s about 23% above its 52-week low, posted earlier this morning, and 76% below the 52-week high. Demand Media was hit hard by a change earlier this year to Google’s search algorithm and the company hasn’t recovered. The target price here is too high, and the company continues its arguable accounting practice of capitalizing content creation costs and amortizing them over five years. The effect of that practice is to spread costs over a long period, making the company look more profitable than it may be.
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