Facebook and Amazon are among JP Morgan's top internet picks despite regulatory scrutiny

Published Mon, Sep 9 20193:05 PM EDT

Facebook and Amazon are two of J.P. Morgan's top picks in the internet sector, despite intensified scrutiny from regulators at home and abroad. The firm likes Facebook , Amazon , Twitter , Netflix and media company IAC in the second half of 2019. Regulatory overhang is a top internet theme and risk this year, according to J.P. Morgan. The internet sector has faced large amount of scrutiny this year, with the Department of Justice reviewing the competitive practices of both Facebook and Amazon. Despite the investigations, J.P. Morgan says the listed five stocks are stand-outs. The firm has overweight ratings on all five companies. J.P. Morgan has a $255 price target on Facebook, which currently trades around $187 per share. Facebook has strong user metrics, especially with Instagram, said J.P. Morgan internet analyst Douglas Anmuth in a note to clients. The social media company is leaning into products again with shopping, dating and digital currency Libra, he added. Facebook is "displaying strong execution and growth in 2019, despite regulatory headwinds," said Anmuth. The firm said Amazon's Prime free 1-day shipping can potentially drive revenue reacceleration in the second half of the year, as core retail trends remain healthy. Anmuth said e-commerce share gains are getting harder with more competition from brick and mortar retailers like Walmart and Target . The firm has a $2,300 price target on Amazon, which trades around $1,833. Twitter ($52 price target) stands out for its strong advertising revenue growth, the firm said. And Netflix's ($425 price target) second half of 2019 content slate "is perhaps its best ever and gives us confidence in the company's ability to achieve its guide of higher Y/Y global paid net adds in 2019,' said Anmuth. J.P. Morgan said media company IAC/InterActiveCorp's assets are undervalued. IAC, which owns Vimeo and has an 80% stake in Match Group, has a stock that trades around $245 a share, compared to the firm's price target of $300 per share. "IAC has an impressive track record creating shareholder value, helping form what has become 10 new public companies worth ~$60B since 2005," said Anmuth. — with reporting from CNBC's Michael Bloom

The Facebook app is displayed on the screen of an iPhone.

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Facebook and Amazon are two of J.P. Morgan's top picks in the internet sector, despite intensified scrutiny from regulators at home and abroad.

The firm likes Facebook, Amazon, Twitter, Netflix and media company IAC in the second half of 2019.