Internet earnings could be mixed this time around, especially because of how quickly many of them have appreciated over the last few months. Facebook Inc (NASDAQ:FB) and Netflix, Inc. (NASDAQ:NFLX) look especially good going into their third quarter reports, according to analysts at JPMorgan Chase & Co. (NYSE:JPM). They expect Amazon.com, Inc. (NASDAQ:AMZN) to report results which are in line with expectations, while Google Inc (NASDAQ:GOOG)’s results could be mixed.
Facebook seeing good momentum in earnings
JPMorgan analysts Doug Anmuth, Kaizad Gotla, Bo Nam and Diana R Kluger are especially positive on Facebook Inc (NASDAQ:FB) going into the third quarter. They said the social network is benefiting from “momentum around native advertising.” Advertisers are starting to see better return on their investment using Facebook, so they expect the company to report strong third quarter results.
They see potential upside to their 10 percent sequential advertising revenue growth estimate and $842 million in mobile ad revenue. They also see more upside potential for Facebook Inc (NASDAQ:FB) in the fourth quarter because of “robust demand” in the social network’s ad auction system. They said engaging but simpler formats, plus better tracking capabilities and an increasing breadth of advertisers will work out well for Facebook. They reiterated their Overweight rating and $53 per share price target on the company.
Google’s earnings results could be mixed
Like others, the JPMorgan analysts note that Google Inc (NASDAQ:GOOG)’s third quarter results will likely be mixed because of the transition to Enhanced Campaigns. However, they don’t think that transition had a “materially negative impact” on overall spending during the quarter.
They believe expectations for the search giant are “muted” and that Enhanced Campaigns and Product Listing Ads will both help Google Inc (NASDAQ:GOOG)’s earnings more during the fourth quarter, which is seasonally stronger. They remain buyers of Google shares even at their current levels, reiterating their Overweight rating and $1,015 per share price target on the stock.
Netflix earnings estimates nudged higher
The analysts are also positive on Netflix, Inc. (NASDAQ:NFLX) going into its third quarter earnings report. They expect to see strong third quarter streaming net adds and believe subscriber momentum will continue into the fourth quarter and next year. They suggest that as more and more consumers become aware of Netflix, Inc. (NASDAQ:NFLX)’s original shows through the rest of this year, the company will see greater content differentiation at the company. They also expect customer awareness to drive even more subscriber additions.
They raised their 2015 streaming subscriber estimates because they believe Netflix, Inc. (NASDAQ:NFLX) will build strong brands around its original shows. They also believe its broad content selection will appeal to larger audiences over time. They raised their year-end 2014 price target to $340 from $290 a share after raising their estimates. The analysts note that they did not factor in a price increase, which could provide upside to their numbers.
Amazon expected to report in-line earnings
Amazon.com, Inc. (NASDAQ:AMZN) reports its results on Oct. 24, and JPMorgan Chase & Co. (NYSE:JPM) is expecting results which are in line with the upper half of the company’s guidance. They’re looking for $16.7 billion in revenue, compared to guidance of $15.45 billion to $17.15 billion for the third quarter. They expect guidance of $24 billion to $27 billion for the fourth quarter, and they have estimated for revenue of $26 billion for that quarter.
They point to comScore data which shows ecommerce trends are still healthy in the U.S., and they’re improving a bit in Europe. They believe Amazon.com, Inc. (NASDAQ:AMZN) shares have been increasing since the end of August because of increased excitement leading up to the holiday season as well as possible benefits from the console gam upgrade cycle. They remain Neutral on Amazon with a $285 per share price target.
