Munster ♥'s Apple
Veteran analyst Gene Munster predicted that Apple will be the best-performing FAANG stock in 2019. The managing partner at Loup Ventures said the Cupertino, California-based company, one of worst performing large-cap internet and technology stocks in 2018, will be boosted by investors paying more attention to revenue and earnings growth, rather than lackluster iPhone unit sales.
“Apple’s new reporting methodology will help focus investors on revenue and earnings growth, which should advance the view of Apple as a service,” wrote Munster. "This greater confidence in revenue and earnings visibility should be positive for AAPL’s multiple as well.”
Munster also believes investors will appreciate Apple’s safeguarding of consumer data, particularly as he expects the likes of Facebook, Alphabet Inc.'s (GOOGL) Google, and Amazon.com Inc. (AMZN) to face sentiment-damaging regulatory scrutiny from U.S. lawmakers during 2019. However, the analyst warned that the company won’t be immune from “any broader economic slowdown” and cautioned that disappointing March guidance could weigh on the share price.
Citron Says Facebook is in Bargain Territory
Another FAANG stock predicted to do well in 2019 is Facebook. Short-seller Citron Research applauded the social network for keeping hold of 2.2 billion active users during a controversial 2018 and believes it is only a matter of time before investors realize that the stock has been punished excessively.
“In the past 30 months FB has more than doubled its quarterly revenue and concerns of engagement have shifted to concerns of addiction, yet the stock is back down in $120 range. Time to back up the sleigh!” analysts at Citron, who slapped a $160 target price on the stock, wrote.
Citron pointed out that Facebook is trading at its lowest ever earnings multiple, despite growing faster than 95% of S&P 500 components and generating wider margins than 90% of the index. Looking ahead, Citron, who noted that the stock is now cheaper than controversial tobacco firm Altria Group Inc. (MO) and multi-level marketing company Herbalife Nutrition Ltd. (HLF), added that the social network has plenty of opportunities to better monetize its cash cow, Instagram, and restore its damaged reputation.
Investors Sleeping on Roku's Ad Potential: Needham
Roku is another company expected to bounce back after a challenging 2018. On Wednesday, the streaming TV platform’s shares rose 11.7% after Needham named it its top pick for 2019.
Analyst Laura Martin slapped a $45 price target on the stock, representing roughly 68% upside from where it was previously trading, citing the company’s strong position in a growing market, scale and demographic reach as key drivers.
Martin estimates that 10% of viewers aged between 18 to 34 in the U.S. are on Roku and that 10 million of these users don’t have access to traditional linear TV subscription. Those statistics, the analyst added, make Roku a compelling solution for advertisers, who will be keen to tap into this important demographic.