Pro Analysis

Trump overhang may weigh on FANG stocks through the end of the year, UBS says

Presidential elect Donald Trump
Drew Angerer | Getty Images
Presidential elect Donald Trump

Shares of Facebook, Alphabet and Amazon may continue to struggle into 2017 until the companies release strong fourth-quarter earnings that outweigh concerns of some sort of crackdown by President-elect Donald Trump against the internet sector, according to UBS.

"During the election, many of our large cap names (AMZN, GOOG, FB) were targeted by the President-elect & investors are struggling to determine the ramifications on antitrust policy, privacy/data in enterprise/consumer, net neutrality & taxation," UBS Internet analyst Eric Sheridan wrote in a note to clients Monday. "Among large cap names, we continue to reiterate our top recommendations (in order) for FB, GOOG, BABA, PCLN & AMZN (though fully acknowledge that forward investment curves & the election results may overhang those shares until Q4 earnings season)."

Shares of Facebook and Google-parent Alphabet are down 5 percent and 6 percent, respectively, since the election. Amazon and Netflix (which Sheridan does not cover) are down more than 8 percent each since Trump's win.

FANG stocks since election

Source: CNBC.com

Here's the real reason why Sheridan, one of the top-ranked analysts in the space, thinks internet shares are falling and why they can be bought at these levels.