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.



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Views +1:Full 360-Degree Preview of Amazon.com Earnings (AMZN, BBY, AAPL, NFLX)

Amazon.com Inc. (NASDAQ: AMZN) is set to report earnings after the close of trading on Tuesday.  What makes Amazon so different from many peers in technology, internet and virtual companies is that it is only recently off of its highs and not really by that much.  Even after a 2.5% drop so far on Tuesday, the $231.50 area compares to a closing price yesterday of $237.61 and to a 52-week range of $156.77 to $246.71.

Here are the targets.  Amazon.com continues to be a thorn in the side of Best Buy Co. Inc. (NYSE: BBY) for consumer electronics.  The big question is whether or not it can take away iPad sales from Apple Inc. (NASDAQ: AAPL) with the new souped up Kindle models and whether or not it can suddenly challenge NetFlix, Inc. (NASDAQ: NFLX) now that Reed Hastings seems to be messing up on every turn.

Thomson Reuters has estimates for its third quarter of $0.24 EPS and $10.93 billion in sales.  For the current fourth quarter we are already in, those estimates are $0.86 EPS and $18.05 billion in revenues. Keep in mind that the fourth quarter is “the money quarter” as it includes Christmas and the holiday season sales and the estimates compare to the readings a year ago of $0.91 EPS and $12.95 billion in sales.

What is amazing is that Amazon.com still trades at more than 100-times expected 2011 earnings.  The company has rapidly been building its cloud efforts and building its infrastructure.  This has all come at the expense of margins, and trying to factor in the new Kindle sales will be no easy task. 

If you just use the weekly options, then it looks as though options traders are braced for a move of up to about $9.50 to $11 in either direction.  If we use the monthly expiration November options, then it seems that options traders are braced for a move of $14.00 or more in either direction.

You can take a look at the chart from stockcharts.com below if you want.  The stock is looking tired, but honestly we would have said the exact same thing a month ago right before we saw a false-breakdown of the chart.  We would point that the 50-day moving average was tested and held for the most part a month ago.  That 50-day moving average is now down at $219.28 and the 200-day moving average is $197.20.

The analyst community has a consensus price target just above $243.50.  At some point, Wall Street is going to demand higher margins.  When that is can be anyone’s guess.  We stopped trying to harp on it because no one seems to care.
JON C. OGG........
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Views +1:Valuation, Timing & Margins Catch Up To Amazon.com (AMZN)

Amazon.com Inc. (NASDAQ: AMZN) has turned in earnings for its third quarter, and we will be paying extra attention to its fourth quarter.  The seller of everything online reported earnings of $0.14 EPS on sales of $10.88 billion, which compares to the Thomson Reuters targets of $0.24 EPS and $10.93 billion in sales.  Operating income was $79 million.

Amazon also guided the fourth quarter to come in at %16.45 to $18.65 billion in sales and it put the range for operating earnings at -$200 million to a profit of $250 million.  The Thomson Reuters estimates are $0.86 EPS and $18.05 billion in revenues.  As noted in the preview, the fourth quarter is Amazon’s “money quarter” as it includes Christmas and the holiday season sales.

We have been concerned each quarter about Amazon’s margins and its operating margins came in at 0.7%.  North American sales are currently about 20% larger than its international sales.  Even before the guidance, Amazon traded at more than 100-times expected 2011 earnings.   The big outlier was the new Kindle sales. 
The news may finally be catching up to Jeff Bezos and friends today.  Shares closed down 4.4% at $227.15 versus a recent all-time high of $246.71, but shares are down sharply and just under $194.00 as of about 4:17 PM EST.

We will hold off before tallying up all of the post-conference call judgment.  Bezos has had similar quarters before where the reception went from bad to good.  We do not believe that can happen forever and we believe that at some point investors will start to demand better margins and higher profits.  It is not exactly as if Amazon is an emerging online retailer....
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Views +1:FedEx Adds to Seasonal Hiring Boost (FDX, BBY, JCP) Read more: FedEx Adds to Seasonal Hiring Boost (FDX, BBY, JCP)


FedEx Corp. (NYSE: FDX) expects to handle more than 260 million packages during the coming holiday season. That’s a 12% increase from a year ago, and to cope with the flood the company plans to hire 20,000 temporary workers. That’s more than we noted from either Best Buy Co. Inc. (NYSE: BBY) or J.C. Penney Co. (NYSE: JCP) in our recent look at the retailers expected to do the most seasonal hiring this year.

That’s good news for employment, but not altogether a boost for FedEx. The company noted that most of the volume increase this year is coming from its low-profit SmartPost residential service where the US Post Office completes the package delivery. The SmartPost service includes mostly light-weight, unspecified delivery date packages from on-line sales that do not generate a lot of revenue for FedEx.

The company still expects retail sales to rise 2.5%-3% this holiday season. However, if FedEx is right about where its revenues are coming from, local retailers could be be in for a tough holiday shopping season. Large retail chains, though, could get a somewhat bigger boost from an increase in on-line sales................
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Views +1:NetFlix Shares Down 24% On Earnings


Wall St. slashed shares of NetFlix (NASDAQ: NFLX) has it missed all projections for revenue, earnings, and subscribers. The firm’s price decisions, which have alienated customers, may have permanently hurt the company. The poor judgement which included raising subscriber rates sharply,  comes as powerful competition from Amazon.com (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Hulu, and YouTube enter the market.

Third quarter earnings were up 63% to $1.16, which would have been an impressive improvement for any other company.

Netflix reported 21.45 million streaming subscriptions at the end of the third quarter and 13.9 million DVD subscribers. The company said total U.S. subscriber base by the end of its third quarter was 23.79 million—below expectations of roughly 24 million. Netflix lost 810,000 subscribers between the second and third quarters.

Netflix said it would miss Q4 forecasts as well.............


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Views +1: Closing Bell (AAPL, WMT, WFM, MS, BAC, INTC, WMB, HGSI, ABT, OXGN, PWAV, AEM) Read more: 24/7 Wall St. Closing Bell (AAPL, WMT, WFM, MS, BAC, INTC, WMB, HGSI, ABT, OXGN, PWAV, AEM)


Stocks opened down this morning following the earnings report Apple Inc. (NASDAQ: AAPL) after markets closed yesterday. Moody’s downgrade of Spain’s sovereign debt also weighed on the opening.  The Consumer Price Index for urban consumers rose by 0.3%, and just 0.1% excluding energy and food costs. Housing starts rose by an unexpected 15% as condos and apartment construction was prompted by more demand for rental units to push markets to a mid-morning gain, but by noon share prices had given a lot of that back on continuing uncertainty about what’s really happening in Europe.  The Federal Reserve Beige Book was released at 2 p.m. ET, and its uninspiring reports sent markets sharply lower, from about 25 points up on the Dow to more than 70 points below yesterday’s close.
The unofficial closing bells put the DJIA down nearly 72 points to 11,504.70, the NASDAQ fell more than 53 points (2.01%) to2,604.04, and the S&P 500 fell 1.26% or more than 15 points to 1,209.89.
Today’s top analyst upgrade and downgrade calls were numerous and included Wal-Mart Stores Inc. (NYSE: WMT) and Whole Foods Markets Inc. (NASDAQ: WFM), and about a dozen other companies.
Morgan Stanley (NYSE: MS) reported better than expected earnings for the quarter, following  yesterday’s positive report from Bank of America Corp. (NYSE: BAC).  Morgan Stanley got a big lift from an accounting gain that lowered the value of its debt by $3.4 billion, thus boosting the bank’s revenue to $9.9 billion. Even without the gain, MS posted EPS of $0.02, There has been a turnaround from the indicated loss in Bank of America Corporation (NYSE: BAC) after its earnings showed that book value managed to actually grow and the stock was up almost 10% at $6.63 late in the session.
As far as the other big earnings report reactions today (prices within 20 minutes of the closing bell): Apple is down more than -5.5%, at $398.78; Morgan Stanley up 0.3%, at $16.68; Intel Corp. (NASDAQ: INTC) is up about 3.5%, at $24.22; Yahoo is up 2.78%, at $15.90.
Several other standouts from today are as follows…
Williams Companies, Inc. (NYSE: WMB) rose again by another 1.7%, to $29.55, after investors are considering it a cheap merger alternative to the El Paso buyout by Kinder Morgan this week.
Human Genome Sciences, Inc. (NASDAQ: HGSI) had another big day on merger speculation up, up nearly 8%, at $13.83, and here is how it ranks with analysts other price targets for biotechs ahead of the biotech earnings floodgates.
Abbot Laboratories (NYSE: ABT) rose 1.62%, to $53.29, following the announcement of the company’s intention to split its branded drug business from its other product lines.
Oxigene, Inc. (NASDAQ: OXGN)  got a nice boost of about 12.55%, to $1.59, following good data on the survival benefits of its anti-thyroid cancer drug.
Powerwave Technologies, Inc. (NASDAQ: PWAV) warned of a revenue shortfall of more than 50% for its third quarter. The shares lost nearly -42% of their value, to fall to $0.85, after posting a new 52-week low of $0.68 earlier in the day.
Agnico-Eagle Mines Ltd. (NYSE: AEM) has suspended operations indefinitely at its mine in Val d’Or, Quebec, due to unstable ground and inflows of water. The stock has fallen by -19%, to $46.21.
Stay tuned for Thursday.  We have speeches to watch from Lockhart and Kocherlakota on the docket as well as a 30-year TIPS auction.  Here are some economic releases due in the morning and throughout the day:
  • 8:30 Unemployment Benefits Claims for last week
  • 8:30 Existing Home Sales
  • 10:00 Conference Board’s Index of Leading Economic Indicators
  • 10:30 Natural Gas Report
  • 4:30 PM Federal Reserve Balance Sheet
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Views +1: Top After-Hours Earnings Stocks on the Move (AXP, BWLD, CRUS, CBST, EBAY, ETFC, RVBD, WDC, WYNN) Read more: Top After-Hours Earnings Stocks on the Move (AXP, BWLD, CRUS, CBST, EBAY, ETFC, RVBD, WDC, WYNN)


24/7 Wall St. is tracking the after-hours earnings reports to see which stocks are on the move and which ones will be the key issues for Thursday morning. The top movers are as follows: American Express Company (NYSE: AXP); Buffalo Wild Wings Inc. (NASDAQ: BWLD); Cirrus Logic Inc. (NASDAQ: CRUS); Cubist Pharmaceuticals, Inc. (NASDAQ: CBST); eBay Inc. (NASDAQ: EBAY); E*TRADE FInancial Corporation (NASDAQ: ETFC); Riverbed Technology, Inc. (NASDAQ: RVBD); Western Digital Corporation (NYSE: WDC); and Wynn Resorts Ltd. (NASDAQ: WYNN). 
A brief summary of the news and the after-hours reaction is available on each below.
American Express Company (NYSE: AXP) beat earnings estimates at $1.03 EPS versus $0.95 estimates.  Shares were down 1.2% today and shares are currently down another 1.2% at $45.59 in the after-hours session.
Buffalo Wild Wings Inc. (NASDAQ: BWLD) beats earnings at $0.61 EPS versus $0.63 EPS estimate; revenues rose over 30%; it sees meeting a goal of 13% unit growth and 23% net earnings growth for 2011. The dining, beer, and sports destination also sees 2012 with 12% unit growth and net earnings growth of 20% in 2012.  Shares fell 0.8% on the day but the stock is up 3.3% at $59.81 in the after-hours session.
Cirrus Logic Inc. (NASDAQ: CRUS) beats earnings but guided next quarter below estimates as it is seeing softness in some areas of business due to global economic issues.  Shares were down 5.5% at $17.01 on the regular trading day and shares are down another 12% at $14.73 in after-hours.
Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) beat $200 million in sales for the quarter and shares are up almost 8% at $39.33 after closing down 1.75% today.
eBay Inc. (NASDAQ: EBAY) met its $0.48 EPS target and sees $0.55 to $0.58 EPS versus $0.58 EPS targets in Q4.  Shares were down 2% on the day and down another 4.3% at $31.83 in after-hours trading. 
E*TRADE FInancial Corporation (NASDAQ: ETFC) is now up after having been down.  It appears to have met the $0.16 estimate but revenues were light; shares closed down 2.6% on the day but are back up almost 2% at $9.52 in after-hours.  No word on any merger, again.
Riverbed Technology, Inc. (NASDAQ: RVBD) may be getting its mojo back… It beat earnings and guided higher.  After falling 2.8% on the day shares are up over 11% at $25.10 in the after-hours and the 52-week range is $12.57 to $44.70.
Western Digital Corporation (NYSE: WDC) was down 9% today on Thai flood concerns and shares are down another 2% at $24.00 in the after-hours session despite $1.01 EPS.  The floods could impact they key quarter ahead.
Wynn Resorts Ltd. (NASDAQ: WYNN) was down over 5% on its own today and now the high-end casino operator posted $1.05 EPS versus $1.15 estimates even though revenues were in line and up 29%.  Shares are down another 5.2% at $123.48................
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