Top analyst Brent Thill at Jefferies is exploring the ins and outs of the internet and tech-verse and is placing his conviction behind two innovative kings of Wall Street: Facebook Inc (NASDAQ:FB) Amazon.com, Inc. (NASDAQ:AMZN). From cloud computing to digital advertising footsteps to the master of a dance between internet and software, e-commerce, and video gaming, the analyst dissects what exactly makes Facebook and Amazon such solid, advantageous stock picks.
Brent Thill has a very good TipRanks score with a 73% success rate and a high ranking of #43 out of 4,616 analysts. Thill garners 15.8% in his annual returns.
Let’s take a closer look:
Facebook to Outclass Fierce Competition in the Near-Term Race
When it comes to the “Big 3,” says Thill, there is no denying his long-term favorites are Facebook, Amazon, and Alphabet. However, the odds from this analyst’s vantage point favor the social media titan when looking at the upcoming year, especially as its Instagram acquisition continues to pay off.
As such, predicting CEO Mark Zuckerberg’s player is ready to beat out its mammoth rivals, Alphabet and Amazon, as the forthcoming 12 months unravel, the analyst maintains a bullish stance on Facebook stock.
True, Facebook is a stock not immune to risk, and a chief one Thill highlights points to Amazon extending to claim new markets, amassing further upside along the way. However, “[…] we think FB shares look most compelling near-term driven by growth in NA ARPU fueled by additional Instagram monetization and growing presence of video,” argues the analyst.
Likewise, in an age where to the victor of digital advertising share goes the spoils, Thill anticipates, “Facebook is best positioned to continue to capture share in digital advertising driving greater incremental video views through additional professional content. Instagram continues to be under-monetized and is a leader in engagement and has the best ad tech stack for marketers of all sizes.”
Rumors sprung up last year of Facebook’s ad revenue driver, ad load hitting a slump by the middle of this year- apprehensions the analyst dismisses as “overdone,” as he projects, “…[we] see upside to numbers through continued ARPU expansion as FB adds higher priced video advertising inventory. FB has averaged 45% Y/Y growth in its most important ad market of North America over the past 8 quarters and we think continued 35%+ growth could continue.”
Looking ahead, the social media titan’s outreach entices Thill even beyond the short-term, as he surmises, “Facebook’s never ending reach could reach 3.5B MAUs by 2022 and continue to drive ARPU higher as it pushes towards video and monetizes other properties.”
The rest of the financial world seems to echo the top analyst’s resounding confidence, considering TipRanks analytics indicate FB as a Strong Buy. Out of 35 analysts polled by TipRanks in the last 3 months, 31 are bullish on Facebook stock, 2 remain sidelined, and 2 are bearish on the stock. With a return potential of nearly 16%, the stock’s consensus target price stands at $192.61.
Amazon Just Needs to Triumph Over Law of Large Numbers
Amazon is trouncing the rest in the cloud arena and shares are taking meaningful notice, appreciating ever since the online auction and e-commerce giant first dabbled in the public cloud market. With Amazon Web Services’ stealing the biggest slice of the cloud market share pie, Thill believes momentum is racing on this giant’s side, making it a valuable long-term play.
In fact, when forecasting five years ahead, Thill sees AWS moving towards hitting the $55 billion mark in revenue, benefiting from having had “a massive head start in the cloud IaaS market.” Worthy of note, “AWS is the de facto standard in the public cloud, operating at ~4x the size of MSFT Azure, and 2x the size of its next 5 closest competitors combined (by revenue),” emphasizes Thill.
Not only does the analyst place AWS as “one of the largest software companies on the planet,” but he is positive on shares “closing in on [a] $1 trillion market cap.” The long-term is paved with profitable prospects for Amazon shareholders.
When likewise assessing artificial intelligence “hype,” the analyst believes, “Those companies with the most robust data sets will ultimately benefit.” The first on Thill’s list? Amazon.
However: “Law of large numbers: Amazon is already approaching a $500Bn market cap while also crossing $150Bn in annual revenue.”
Moving forward, “AMZN extends into $100Bn gaming market, and launches Video Game Streaming Service by 2020,” concludes Thill, who values the company’s approach of new market expansion, even as this may translate as a challenge, pulling “focus.” It appears that from Thill’s eyes, Amazon can handle the pressure at stake from the top of its Wall Street throne.
The Street’s vote backs Thill’s pick, with TipRanks analytics exhibiting AMZN as a Strong Buy. Based on 32 analysts polled by TipRanks in the last 3 months, 30 rate a Buy on Amazon stock while 2 maintain a Hold. The 12-month average price target stands at $1,178.50, marking a nearly 25% upside from where the stock is currently trading.