RBC's Mahaney Offers 3 Large Cap Internet Ideas

This morning, RBC Capital analyst, Mark Mahaney published a large cap internet preview so comprehensive the PDF felt heavy. There were many great points in the note and we tried to distill it down to the top 3 investable takeaways and the analyst's perspective on Brexit concerns.

Mr. Mahaney's top 3 picks for the quarter are:
Netflix (NASDAQ: NFLX) is the most “On Sale” high quality large cap ‘Net stock. The analyst views market concerns regarding model profitability, international growth & competition as overstated. No change to Overweight rating or $140 PT.

Priceline's (NASDAQ: PCLN) growth and profitability trends remain consistent and robust, with strong bookings and Room Night Growth. The analyst expects PCLN to FY16 Room Night growth in-line or above FY15 due to: China Outbound and Alternative Accommodations. No change to Outperform rating or $1,600 PT.

Alphabet (NASDAQ: GOOGL) should see TAC stabilize, Core Google Operating Margins expand, and Core Google Revenue Growth staying reasonably close to 20% throughout ’16, creating upside to an intrinsically attractive stock. No change to Outperform rating or $1,000 PT.

Brexit Exposure: In the wake of “Brexit,” analysis shows that five companies have 10%+ Revenue dependence on the UK: TWTR, EBAY, EXPE, PCLN and TRIP, while four have 20%+ dependence on Non-UK Europe (PCLN, EBAY, GOOGL and EXPE). The analyst did not adjust estimates for Brexit, but these companies could see both negative FX translational and demand transactional pressures. This factor could lead to greater conservatism in terms of Q3 outlooks for these companies.

For an analyst ratings summary and ratings history on Netflix click here. For more ratings news on Netflix click here.

Shares of Netflix closed at $97.06 yesterday.

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