Top25-SA-Banner

GBH Says to Buy Amazon.com, Inc. (AMZN) Stock Despite Presidential ‘Bullseye’ on Its Back and Facebook, Inc. (FB) Amid ‘Darkest Chapter in 14 Years’

Though FANG name fears are running rampant through the Street, Daniel Ives remains a bull when it comes to bets on AMZN and FB.


FANG frustration is at a high, GBH Insights analyst Daniel Ives writes, and the weeks and months that come to pass will prove to be “defining” for tech giants like Amazon.com, Inc. (NASDAQ:AMZN) and Facebook, Inc. (NASDAQ:FB).

In the wake of the Cambridge Analytica data and privacy scandal, investor trust in the name Facebook has been shaken. Not only do “regulation and uncertainty remain black clouds over FANG names,” but Ives likewise spotlights Amazon’s separate issue altogether: President Donald Trump.

President Trump has been waging a war against the online e-commerce giant, claiming that the U.S. Post Office is getting conned by Amazon when it comes to how much is lost per each package delivered. So incensed, President Trump went on to tweet that the U.S. Post Office is getting swindled to the harsh tune of “billions of dollars” with its business dealings with the giant.

Perhaps Trump’s real issue boils down to AMZN CEO Jeff Bezos, owner of the Washington Post, which has been chiming in on a highly scrutinized alleged affair between the president and porn star Stormy Daniels.

Either way, even a bull like Ives recognizes pressure hanging above these big tech leaders: “For investors in Facebook and Amazon these are two totally distinct regulatory issues which both have wide ranging ramifications, yet together the confluence of these events has proven to be a significant worry for the Street around FANG names, sending a negative ripple effect across tech stocks while quickly compressing multiples given the uncertainty abound. […] a Street fight between the bulls and bears remains front and center around multiples, risk profiles, regulatory crosshairs, and fundamental strength heading into 1Q earnings season.”

In what the analyst sizes up to be “the darkest chapter” in a 14 year-long history for FB, Zuckerberg’s preparation to testify before Congress regarding the Cambridge scandal is “another step in the right direction.” Presently, the goal is to “calm the public, user, and regulatory choppy waters in this data leak situation” as Zuckerberg and co. proceed in full damage control mode. Rising “public fury” is cropping up across the globe with a “Pandora’s box of bad news” primed to drag the stock in the short-term.

While this kind of disaster could alter the future of FB’s business model and trajectory for growth, the risk could also pose a shimmering buying prospect at play for investors. What Ives sees is a social media titan that stands “unparalleled,” boasting 2 billion plus users and an advertising machine reaping $50 billion each year. With a top-line expanding roughly 30% throughout the upcoming years and powerhouse EPS potential to hit over $10 in two years, the analyst forecasts the stock can “make the climb back to the $180-$200 range as the dust settles.”

Ives also notes a media hailstorm marking Trump’s ‘obsession’ with Amazon, with a worried Wall Street watching the clash between Trump and Amazon unfold. Do Amazon and its leader Bezos have a “bullseye on their backs?” The fear here is that the giant “could see more regulation ahead,” and Ives is all too aware that “the stock is seeing significant pressure and volatility accordingly.” Prospective blockades linger on the horizon amid “anti-trust concerns” hanging heavy.

Bottom line, “Bezos has become a MacGyver-like business leader that is already plotting on the white board potential scenarios, roadblocks, and opportunities around expanding into the healthcare vertical in 2H2018 and beyond while further driving the Amazon consumer flywheel,” contends Ives, who anticipates the AMZN business model is largely safe amid these risks.

Even with skepticism circling overhead, the analyst stands by both tech players. Ives reiterates a Highly Attractive rating on AMZN stock with a $1,850 price target, which implies a 31% upside from current levels. Likewise, the analyst reiterates a Highly Attractive rating on FB stock with a $240 price target, which implies a 52% upside from current levels. (To watch Ives’ track record, click here)