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Citigroup Initiates Coverage on 11 Internet Stocks

Citigroup equity research analyst Mark May initiated coverage on 11 Internet stocks on Tuesday.

The brokerage firm provided comprehensive analysis in stocks such as Facebook Inc. (NASDAQ: FB), LinkedIn Corp. (NYSE: LNKD), Google Inc. (NASDAQ: GOOG), eBay Inc. (NASDAQ: EBAY), Yelp Inc. (NYSE:YELP), Zillow Inc. (NASDAQ: Z), (NASDAQ: AMZN), Netflix Inc. (NASDAQ: NFLX), Yahoo Inc. (NASDAQ: YHOO), OpenTable Inc. (NASDAQ: OPEN) and AOL Inc. (NYSE: AOL).

Below are some of the prognoses on internet stocks.

Facebook Inc: Mark assigned a price target of $27, adding that the stock has a “great potential.” However, he pointed some challenges. As more and more consumers (users) shift towards mobile computing from desktop computing, the social networking giant could continue to face monetization headwinds. Besides, another challenge will be to maintain rapid user/usage growth amid intensifying competition. Citigroup also believes that the company could feel pressure on its margin in the near-term due to onset of an investment cycle. May assigned “sell” rating on the stock.

LinkedIn Corp: For the professional networking site, May wrote in a research note, “ (the current valuation) pricing in both our bullish outlook for the core businesses and also more upside potential from new and future initiatives than we’re currently comfortable assuming,” according to Barron’s. May ascribed “sell” rating on the stock.

Open Table: Although May maintains a “constructive” outlook on the Company due to its “defensive market position” in the restaurant reservation business and its value in the internet commerce sphere, he is not convinced about current valuation which is about $58, saying that it (pricing) does not take into account imminent slowdown in company’s growth.

The restaurant reservation service provider’s stock was assigned a price target of $58 and a “sell” rating.

“While we believe that mobile represents a positive tailwind for OpenTable’s business and that its market position is defensible, we also believe the current valuation does not reflect that top-line growth is likely to decelerate from a recent 15-20% rate to 10-15% over the next 2-3 years,” wrote May in a research note, according to Barron’s.

The research note assigned “buy” rating on, eBay, AOL, Yahoo and Google while Zillow, Netflix and Yelp were ascribed “sell” rating.

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