The companies from FAANG group have seen double-digit growth in value, but some analysts say the rally will continue. Or at least three out of five companies, and the reason will be – good quarterly results.
The group of mega-largest technology companies consists of Facebook, Amazon, Apple, Netflix, and Google’s parent company – Alphabet. And the five companies are expected to report their results by the end of April, as analysts at Barclays recommend investors to add to their positions on Facebook, Amazon, and Alphabet before the results.
All five companies perform better than the broader market this year, although they remain below their record levels in 2018, as a result of fears about their ratings and prospects for growth. While these concerns have not yet disappeared, and growth-oriented companies are the most expensive since the dot-com era, the analyst Ross Sandler of Barclays expects the results to help these three companies perform well.
Barclays “will add positions” to Facebook and Alphabet before their results and recommends that investors “take advantage and buy selectively” Amazon shares before the quarterly earnings report of the company is released.
According to Ross Sandler, the results of Facebook can provide a key boost to investors’ sentiments after the controversial 2018. He has set a price target for 210 USD per share. The stocks of the largest social network yesterday ended at 179 USD, while at the end of last year they fell to 124 USD.
“The investment community is skeptical about the growth and commitment of Facebook users, so any data pointing to improving customer trends should improve the company’s situation”, said Ross Sandler. “Internal controls point to another strong quarter, although this probably will not lead to a rise in stocks, as in the fourth quarter”, added the expert.
Facebook shares rose by nearly 37% in 2019, more than twice the 16% increase in the broader index S&P 500. At the current levels, the social networking stocks are 18% below their record highs since July last year. Facebook will deliver its results after the end of the session on April 24.
Amazon will deliver its earnings report a day after Facebook, and while Barclays expects the quarter to be “mixed”, Ross Sandler writes that “unlike the last two quarters, the mood is already ready for that”. Barclays has set a price target for the company’s stock of 1,930 USD.
“Looking back, investors rarely get a chance to buy Amazon stocks at 19x EBITDA”, added the expert.
Amazon is currently about 10% lower than its record levels, although its shares have risen by 37% since December.
For Alphabet, Sandler believes the company can benefit from margin improvement. The current picture “reminds a lot about the situation at the beginning of 2015, with Google’s operating margins moving from bad to stable, which laid the foundation for a 40% growth in the company’s stock”.
Sandler confirmed Barclays’ price target of 1,350 USD per share.