RBC Capital Lists Top Intenet Large Cap and SMID Cap Picks (AMZN) (NFLX) (more...)

RBC Capital analyst Mark Mahaney was out with a report on his top large cap and small/mid cap Internet Sector Picks following Q3 results.

Large Caps:

1. Amazon (NASDAQ: AMZN) with his $420 price target representing 32% upside. "... with a relatively positive 2015 Setup (anniversarying steep industry cloud computing price cuts, Japan Consumption Tax, select U.S. state sales taxes, etc… and seeing the building impact of Prime Price Increase & Same Day/Next Day Delivery Buildout, with an increasing probability of an investment cycle end) and shares trading well below historic P/S range (suggests +45% upside)"

2. Netflix (NASDAQ: NFLX) with a $550 price target, representing 44% upside. "... with 2015 likely to benefit from a materially stronger Original Content launch than 2014; Ongoing International launches should demonstrate global appeal, while “Hidden” Valuation Analysis still shows substantial valuation support."

3. Facebook (NASDAQ: FB) with a $92 price target, suggesting 24% upside. "... with Greenfield Rollouts of Auto-Play Video Ads, Instagram Monetization, FAN & Whatsapp likely offsetting the impact of an increased investment cycle; and even with the 35% YTD stock price increase, has one of the most attractive Growth-Adj. Valuations in the group (0.5x EV/EBITDA/G)"

PCLN and LNKD are #4 and #5 Large Cap Picks

Small/Mid Caps

1. Yelp (NYSE: YELP) with an $86 price target, representing 46% upside. "... consistent Fundamental Trends (60-70% Rev growth for last 12 qtrs) and two Gap-Up Opportunities (Int’l and Cohort monetization) as well as its Strategic Value on the ‘Net."

2. Shutterstock (NYSE: SSTK) with $90 price target, suggesting 20% upside. "... long-term thesis well intact, and 2015 setup looks positive."

3. Pandora (NYSE: P) with a $35 price target, suggesting 75% upside. "... tho there is a LOT of fear in the market re: Pandora, Listener Hours remain robust (20%+), In-Car is now a material (10%) channel, and an International launch is probable for ’15 or ’16."

ZU and SFLY are our #4 and #5 Small Cap Picks.

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