Investors who hold the FANG stocks (Facebook, Amazon, Netflix, Google/ Alphabet) may want to consider recalibrating their holdings… perhaps into GFAN, GNFA or ANFG, according to one analyst. However, it looks like nothing will stop the FANG stocks as the sky’s the limit for all four of them. The only one of the four in question lately has been Netflix, even it remains a darling among Wall Street analysts, despite the questions about content spend and subscriber numbers.

FANG stocks take a bite out of BAGEL

Around this time last year, some analysts were thinking that BAGEL (Alibaba, Amazon, Google, Expedia, LinkedIn) would replace FANG in 2016, but that didn’t happen. A lot has changed since December 2015. LinkedIn is out of the picture, as it’s in the process of being acquired by Microsoft. Alibaba is rising in popularity still but facing questions about its accounting procedures, and Expedia has failed to turn into the hot stock some thought it would, although it has managed to climb back to around the level it was trading at a year ago.

Canaccord Genuity analyst Michael Graham noted in his Nov. 30 update on the FANG stocks have outperformed the broader market “by a wide margin” over the last two years, although they had a rather mixed third quarter. He explained that each member of the group had a difference performance around its earnings report.

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Then after Donald Trump surprised everyone by winning the presidency, there was a broad sell-off of all the FANG stocks and the tech sector as a whole, although that was short-lived. Cantor Fitzgerald recently did a study of how Trump’s presidency might affect the constituents of FANG, and one of the key risks he found for all of them was an overhaul to net neutrality rules. He named Trump’s protectionist views as a far smaller risk for the FANG names than for other tech plays such as Apple, which relies heavily on China.

Graham still expects the group to perform well throughout 2017, although he suggests fine-tuning exposure to the individual stocks based on time horizons.

FANG stocks to benefit from strong tech sector

Graham’s colleague Tony Dwyer expects the tech sector to do well in the coming year based on the current macro backdrop, which is strong and features a steeping yield curve, low P/Es and buyback support. President-elect Trump is widely expected to instigate corporate tax reform, with one likely outcome being incentives for companies to repatriate cash. If this happens, companies could have some fresh cash to buy back shares with.

Graham also believes that the four main drivers of the FANG stocks – digital advertising, digital video viewing, e-commerce and cloud services – are still intact, with the tech sector being “mid-stride” in all of them. One headwind for the group, however, is the ongoing shift from non-GAAP to GAAP metrics. Graham said Netflix isn’t affected at all by the shift but that Facebook is the most affected of all the FANG stocks.

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Timing impacts positioning in FANG stocks

The analyst also suggests that investors examine and readjust their positioning based on “time horizons.” For example, for the first quarter, they suggest GFAN rather than FANG, with investors buying more of the first stock in the list, Google.

The reason is because he expects Google parent Alphabet to “power through Q4 with valuation support” and because the company doesn’t issue guidance. He believes the lack of guidance will help keep the momentum in the company’s stock going through March, adding that Facebook has the same features except it lacks the valuation. He expects Netflix to have a strong fourth quarter but possibly give a cautious guide for first quarter subscriber numbers.

For all of 2017, Graham suggests GNFA. He sees Google and Facebook as having “achievable mandates,” although Facebook could be hurt by the shift toward GAAP metrics. Meanwhile he expects Netflix to deliver on subscriber numbers in the second half of the year but spend more on content, while first-half estimates for Amazon may fall as a result of price cuts.

Adjusting price targets for FANG stocks

Because of the change to GAAP metrics, Graham also adjusted his price targets for the FANG stocks. He cut his Facebook stock target by $10 to $150 per share based on GAAP numbers, although increased estimates slightly offset that shift. He slashed his target for Amazon stock from $900 to $875 due to the shift to GAAP and lower expectations for Amazon Web Services.

His price target for Google stock moves to $925 from $950 per share due to the shift to GAAP numbers, although higher estimates offset the drag from that shift. His target for Netflix stock remains at $140.