Barclays Initiates Coverage on 10 U.S. Internet Companies: Still Early In the Growth Cycle

Barclays on U.S. Internet: Still Early In the Growth Cycle

Barclays analyst, Mark May, said, "We are initiating coverage of 10 new names in the U.S. Internet sector, with a focus on coverage in the Internet media and e-commerce sectors. We rate Shutterfly (Nasdaq: SFLY), LinkedIn (Nasdaq: LNKD), IAC/InterActiveCorp (Nasdaq: IACI) and Demand Media (NYSE: DMD) each as Overweight, HomeAway (Nasdaq: AWAY), Vistaprint (Nasdaq: VPRT) and QuinStreet (Nasdaq: QNST) as Equal Weight, and OpenTable (Nasdaq: OPEN), ReachLocal (Nasdaq: RLOC) and WebMD (Nasdaq: WBMD) as Underweight. Our ratings are relative to our coverage universe, and in the context of our overall U.S. Internet sector rating of 1-Positive."

"We are bullish on the growth outlook for Internet advertising and e-commerce, and believe double-digit growth in both sectors is sustainable for the foreseeable future...The current macro economic condition creates uncertainty and risk as our universe is sensitive to consumer discretionary spending and the stocks, on average, trade at premium multiples."

"We prefer companies with 1) above-average growth and/or profitability, 2) attractive target end markets, 3) a record of management execution, 4) some level of predictability, 5) a favorable competitive environment, and/or 6) business optionality."

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