Key insights
- Wolfe Research highlights attractive valuations in large-cap internet stocks and identifies Meta and Uber as outperform opportunities. Meta is expected to beat revenue estimates due to AI improvements and advertising strength, with a $800 price target. Uber is also rated outperform with a $90 target. The analysis suggests a moderately bullish outlook for these stocks based on potential earnings revisions and growth acceleration.
Investing.com -- Large-cap internet stocks are trading at attractive valuations as volatility persists in the sector.
Mega caps are trading three turns below their three-year historical medians, while large caps sit well below their three-year median levels.
Despite compressed valuation multiples since fourth-quarter earnings reports, fundamentals appear healthy as earnings season begins and macro fears abate.
According to Wolfe Research, several internet stocks present near-term opportunities with the highest likelihood of upward estimates revision, potential for topline growth acceleration, meaningful margin expansion, and relatively greater macro resiliency.
The firm identifies four stocks where AI-based innovation and re-grossing opportunities could drive performance.
Meta Platforms (META) - Wolfe Research maintains an Outperform rating with an $800 price target. META shares have underperformed the S&P 500 by 12 points since its January 28 earnings report.
The broker expects first-quarter revenue to beat Street estimates by low-single digits based on advertising checks, seasonal trends, and historical patterns.
For the second quarter, management’s revenue guidance is expected above Street consensus at $61 billion versus $60 billion, driven by improvements in recommendation and ranking from Lattice, GEM, and Andromeda. The Muse Spark launch is viewed as a clearing event.
Valuation at 17 times 2027 earnings appears highly attractive.
In recent developments, Meta Platforms has received several reiterated Buy or Overweight ratings from firms like TD Cowen and Piper Sandler, citing advertising growth momentum. The company is also facing a potential European Commission order to reverse a policy related to rival AI chatbots on its WhatsApp platform.
Uber Technologies (UBER) - Wolfe Research rates the stock Outperform with a $90 price target. UBER shares have underperformed the S&P 500 by two points since its February 4 earnings report.
The firm expects first-quarter bookings to beat Street estimates by low-single digits based on checks and intra-quarter trends.
Second-quarter bookings and earnings guidance are expected at least inline with consensus as demand trends remain sticky with pricing uplift. Catalysts include more aggressive buybacks and new autonomous vehicle market launches in the second half of 2026.
Valuation at 11 times 2027 free cash flow and 17 times 2027 earnings remains highly attractive.
Uber Technologies recently agreed to acquire the global chauffeur service Blacklane and is also reportedly reviewing a potential acquisition of a controlling stake in Kakao Mobility. The company also launched fully driverless robotaxi operations in Dubai through its app.
DoorDash (DASH) - Wolfe Research maintains an Outperform rating with a $195 price target. DASH shares have underperformed the S&P 500 by 12 points since its February 18 earnings report.
The firm expects first-quarter gross order value and EBITDA to beat Street estimates by low-single digits. Demand trends appear sticky with pricing uplift, and proprietary survey data suggests DoorDash is gaining market share in grocery delivery. Valuation at 14 times 2027 EBITDA remains highly attractive.
Several analyst firms, including Wolfe Research and BTIG, have lowered their price targets on DoorDash, citing costs associated with a new fuel subsidy program for its drivers while maintaining their Buy or Outperform ratings.
Shopify (SHOP) - After downgrading the stock at year-end near $165 per share, Wolfe Research views the current $112 level as attractive. SHOP shares have underperformed the S&P 500 by three points since its February 11 earnings report.
The firm expects first-quarter gross merchandise volume, revenue, and operating income to beat Street estimates based on healthy intra-quarter demand trends. Catalysts include scaling of new products like Shop Campaigns, Audience, and Sidekick, plus a growing partnership with Google.
More recently, Shopify has seen analysts adjust price targets, with firms like Wells Fargo and Deutsche Bank lowering their targets while maintaining positive ratings. Other firms, such as Piper Sandler, reiterated an Overweight rating, citing a strong revenue growth outlook.
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