After all the Web 2.0 (or 3.0) flops of 2012, it turns out that 2013 may be a very interesting year for the Internet sector. We saw some key developments take place, all of which are likely to have a serious impact on the future of the Web. Here were just some of the highlights.
Yahoo Inc. (NASDAQ: YHOO) was supposed to have another dead and buried year, but Marissa Mayer saved the day. Google Inc. (NASDAQ: GOOG) became a serious mobile player and now owns much of the actual technology, with Android taking over. With the combined Microsoft Corp. (NASDAQ: MSFT) and Yahoo!, Google has more steady competition in its core search market. Facebook Inc. (NASDAQ: FB) destroyed more than its fair share of investor money, only to stage a serious recovery as its mobile plan was deemed adequate. Amazon.com Inc. (NASDAQ: AMZN) continued to grow at the expense of margins.
What 247 Wall St. wants to know is what is the outlook for the Internet sector in 2013 happens to be. As it turns out, there probably will be more surprises ahead in the coming year. We have decided to analyze and evaluate the prospects for the likes of Amazon.com Inc. (NASDAQ: AMZN), AOL Inc. (NYSE: AOL), eBay Inc. (NASDAQ: EBAY), Google Inc. (NASDAQ: GOOG), Yahoo! Inc. (NASDAQ: YHOO), IAC/InteractiveCorp. (NASDAQ: IACI), Microsoft Corp. (NASDAQ: MSFT), Web.com Group Inc. (NASDAQ: WWWW) and of course social networking giants Facebook Inc. (NASDAQ: FB) and LinkedIn Corp. (NYSE: LNKD).
They are in alphabetical order. We highlighted the current and recent trends for color, and we gave expected upside and trading history as well. All consensus estimates for 2013 earnings and the consensus price target from analysts have been provided by Thomson Reuters.
Amazon.com Inc. (NASDAQ: AMZN) is off to one great start in 2013. In fact, its stock hit an all-time high after Morgan Stanley raised its rating to Outperform and gave a whopping $325 price target. We have been extremely surprised that Jeff Bezos has managed to run the company's gross margin down to nothing only to get Wall St. praise. If Amazon can really grab 24% of global e-commerce by 2016 or 2017, as one report suggests, Bezos is going to see his billions grow to even more. The company is taking over the cloud and has grown its Kindle sales despite the love for the iPad garnering so much attention.
Amazon trades at $268.46. While the consensus analyst price target of $277.42 implies that there is only 3.3% upside left, some analysts see Amazon rising to more than $300 in 2013. At more than 150-times expected 2013 earnings, Amazon cannot afford any serious setbacks, and this stock might be very vulnerable if the market corrects.
AOL Inc. (NYSE: AOL) was a significant surprise in 2012, with shares having more than doubled. If you go back a year ago, AOL was only liked by short sellers. The company managed to keep its style of aggressive content with Huffington Post, and it has not lost the identity that so many investors used to wonder about. It also has been able to avoid excessive pay and redundant employees that hurt many new media companies in the past. The reality is that this stock had been battered and bruised for so long that many investors basically forgot about it. After a large stock buyback and then a special $5.15 dividend, it seems that investors are more pleased with their return in AOL shares. A repeat of 2012 in the year 2013 is going to be extremely difficult because so much value was unlocked. What AOL does have going for it is that it already is what Yahoo! wants to become in a content destination and large email provider.
AOL shares are currently just over $30, against a 52-week range of $14.87 to $43.93. With a $2.5 billion market value today, analysts see this value up at $41.50 or so for upside of about 35%. AOL trades at close to 21-times its expected 2013 earnings.
Filed under: 24/7 Wall St. Wire, Analyst Calls, Internet, Mergers & Acquisitions, Technology, Technology Companies, Value Investing Tagged: AMZN, AOL, EBAY, FB, FDN, featured, GOOG, IACI, LNKD, MSFT, WWWW, YHOO, ZNGA