Although the first week of the current earnings season was rough for Wall Street, the second week was much better as internet stocks, particularly Facebook Inc (NASDAQ:FB), led the charge on Wall Street. Cantor Fitzgerald analysts Youssef Squali, Naved Khan and Kip Paulson sais in their report this week that the Cantor Internet Index outperformed the S&P 500 for the week which ended July 25.

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Internet stocks lead the markets

The analysts report that the Cantor Internet Index posted a .8 percent gain the week of July 19 – 25, while the S&P 500 only gained .1 percent in the same week. They broke down their index further and noted that marketing companies rose 3.3 percent drive by Facebook Inc (NASDAQ:FB)’s incredible results. Ecommerce actually fell .7 percent, while subscriptions fell 1 percent and infrastructure declined 1.6 percent during the week.

Facebook PT increased

Cantor Fitzgerald has a Buy rating and $40 per share price target on Facebook Inc (NASDAQ:FB). They note that the company’s reacceleration in year over year revenue growth was impressive and that user engagement is still growing. Also greater revenue growth pushed margins and earnings per share higher.

After the company’s latest earnings report, they nudged their price target up from $35 per share to $40 per share, and today the company’s stock is nearing its initial public offering price after gaining more than 2 percent.

Netflix downgraded to Hold

The analysts downgraded Netflix, Inc. (NASDAQ:NFLX) to Hold with a $260 per share fair value price on the stock. They said they’re still fans of the company’s business model and service in the long term, especially because of its rapidly expanding selection and improving personalization. Contribution margins rose to 22.5 percent or 190 basis points sequentially—well ahead of the company’s guidance of 100 basis points.

However, they join other analysts in expressing concern about the costs of all the content Netflix, Inc. (NASDAQ:NFLX) has been acquiring lately. They note that domestic streaming contribution margin guidance increased to 400 basis points year over year from 100 basis points per quarter. They said since the third quarter guidance is for a 130 basis point increase quarter over quarter, it implies a 130 basis point margin decline quarter over quarter because of the company’s spending on content.

The analysts also remain concerned about faster than expected decline of Netflix, Inc. (NASDAQ:NFLX)’s DVD business.

Still positive on Amazon.com

Cantor Fitzgerald has a Buy rating and $315 per share price target on Amazon.com, Inc.  (NASDAQ:AMZN). They said they’re positive on the stock in the long term. The company’s second quarter results were in line with their estimates although just short of consensus.

They note that Amazon’s gross margin rose 255 basis points year over year and 206 basis points quarter over quarter.

Yelp, ValueClick, LinkedIn report this week

The analysts also gave brief preview for some other key internet companies that will be reporting this week. Yelp Inc (NYSE:YELP) reports on Wednesday, and they’re expecting strong results driven by local ad revenue which they believe will grow 78 percent year over year. The analysts believe Yelp will be one of the main beneficiaries as local advertising revenue grows.

ValueClick Inc (NASDAQ:VCLK) reports on Thursday, and they believe the results will be somewhat muted. They’re expecting to see decelerating top line and lower margins. They said after the weak fiscal year 2013 guidance provided at the end of the last quarter, management should focus on improving top line growth and fixing integration and execution issues. They won’t become more “constructive” on ValueClick Inc (NASDAQ:VCLK) until they see those things happen.

LinkedIn Corp (NYSE:LNKD) also reports on Thursday, and Cantor Fitzgerald analysts believe it will also post strong results. They point to the company’s differentiated offerings and better value for recruiters, premium members and advertiser. They are predicting that there will be upside to consensus for both the second quarter and guidance for the third quarter. However, they still have a Hold rating on the stock.