Evercore ISI tactically constructive on large-cap internet stocks

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By Sam Boughedda

Evercore ISI analysts said the firm is tactically constructive on large-cap internet stocks in a note to clients Thursday.

The analysts said in their Q4 preview that the firm has made three tactical calls into the quarter, with a Tactical Outperform on Netflix (NASDAQ:NFLX) and Booking Holdings (NASDAQ:BKNG) and a Tactical Underperform on Pinterest (NYSE:PINS) (see here).

"Consistent with our '23 Net Outlook report, our investment opinion is Tactically Constructive based on three key factors: 1) Multiples have been de-risked; 2) Estimates have been de-risked; & 3) Broad cost-actions have created an EPS slingshot opportunity," the analysts said.

The firm's top picks into 2023 remain unchanged, but they especially highlight stocks they "believe: a) revenue models are reasonably recession resilient; b) there are new product cycles; and c) cost actions have already been taken."

As a result, Netflix, Uber (NYSE:UBER), and Booking are among the firm's best ideas for "New Money Longs" going into 2023.

"With both NFLX and BKNG, our TAP Outperform calls are based on the belief that Street estimates revisions are likely to be positive post their EPS prints. As discussed later, this belief is based on extensive and very recent survey work on both names as well as on constructive industry datapoints. We also see the valuation setup as reasonable for both NFLX and BKNG, even with their 10% YTD stock price rallies," explained the analysts.