Baird's internet analysts are on a roll: Here are their picks for the second half

Published Thu, Jun 29 20173:30 PM EDT

Research firm Baird released its top stock picks for the second half of the year in the internet and video game sectors. Its analysts are recommending internet giants Amazon , Alibaba, and Facebook. The firm's outperform-rated names have returned 43 percent on average so far this year, according to a note. "We remain positive on internet-sector stocks that represent a combination of share gains within secular growth markets, strong free cash flow attributes, and healthy platform characteristics," lead analyst Colin Sebastian wrote in a note to clients Wednesday. Here are three of Baird's outperform rated internet and video game picks for the second half of the year: 1. PayPal (PYPL) PayPal has about 9 percent upside to the firm's 12-month price target. Baird encouraged investors to watch 'PYPL' due to upcoming developments. These catalysts include growth in the firm's peer-to-peer Venmo payment service and rising use of their recent "Customer Choice" initiative, which enables users to fund their PayPal accounts with major credit cards. PayPal has soared over 30 percent since the year began, prompting positive feedback from Sebastian earlier this month , who cited the firm's continued growth in online payments market share. 2. Facebook (FB) Baird is also bullish on Facebook with a price target a $163, representing 6 percent upside from Wednesday's close at $153.24. "Despite less impressive performance for Online Advertising (+10%)," wrote Sebastian, " we note that large-scale platforms (e.g., FB +31%) continued to outperform smaller-scale companies (e.g., YELP -23%)." Facebook's Mark Zuckerberg announced earlier this week that the online community had reached over 2 billion people , emphasizing his efforts to not only connect the world, but to bringing people closer together. The company isn't invincible though, according to the note. Areas of concern include the shift to mobile platforms, competition, and privacy concerns. 3. EBay (EBAY) eBay is poised to benefit from the acceleration in merchandise volume driven by a refreshed ad campaign. The price target is set at $38, or 8 percent upside from Wednesday's close at $35.31. Last week, eBay said it would match competitors' price for an array of popular products in its most recent attempt to draw customers away from other online retailers such as Amazon. eBay now guarantees the lowest price versus major retailers on approximately 50,000 new products on its Deals site.

Chance Chan | Reuters

Research firm Baird released its top stock picks for the second half of the year in the internet and video game sectors. Its analysts are recommending internet giants Amazon, Alibaba, and Facebook.

The firm's outperform-rated names have returned 43 percent on average so far this year, according to a note.

"We remain positive on internet-sector stocks that represent a combination of share gains within secular growth markets, strong free cash flow attributes, and healthy platform characteristics," lead analyst Colin Sebastian wrote in a note to clients Wednesday.

Here are three of Baird's outperform rated internet and video game picks for the second half of the year: