MKM analyst Rob Sanderson hiked his price targets for three popular stocks, Alphabet, Facebook and Twitter, on Monday, forecasting double-digit gains over the next 12 months.
Alphabet
On Alphabet, Sanderson said the stock is a buy and is going to reach the $1,210 a share within 12 months based on a forecast for higher revenue.
He said YouTube's contribution to the bottom line was probably unnaturally low last quarter due to advertising disruptions as large corporations voiced concerns over some of the videos where their ads were running.
The $1,210 price target is 28 percent above Alphabet's current price, at $945 a share.
MKM, however, said there are risks associated with this trade, including "potential for further fines from the European Commission." In June, the EU smacked a $2.7 billion fine on the internet search giant for antitrust practices.
The analyst also said investors should buy Facebook. He hiked his 12-month price target to $200 from $180 a share — 18 percent higher than Facebook's opening price of $169 on Monday morning.
"Valuation has improved through the year as investor concern over a sharp second half growth deceleration has shifted to an expectation of a more manageable decline in growth rates," he said. MKM believes slower growth for advertising on Facebook is a reality but it "will be manageable" and offset by different pricing models.
On Twitter, Sanderson kept his neutral rating but upped the price target from $16 a share to $18. In early trading Monday, the stock was at $16.38. "The stock dynamic is becoming more interesting," the note to investors says. "User engagement appears to be improving."
MKM also said Twitter is too conservative in its guidance. Sanderson said there is a good chance the company will deliver earnings above estimates.
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