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Top 4 Jefferies Internet Picks for Rest of 2016 After Earnings

With most major tech earnings imminent, it is important to consider what the major companies dominating the internet are expected to do for earnings and what will be their key issues ahead. The Jefferies internet coverage is led by Brian Pitz and Brian Fitzgerald, who they have released their top internet theme picks for earnings season and beyond.

The Jefferies team is positive on focus stocks like Inc. (NASDAQ: AMZN) taking from brick-and-mortar and on web operations, and on and Alphabet Inc. (NASDAQ: GOOGL) for search, mobile and online video. They are also quite positive on Facebook Inc. (NASDAQ: FB) in social media, and remain so on digital performance marketing player Criteo S.A. (NASDAQ: CRTO) despite some of the concerns around that company.

Tuesday’s report shows that ad dollars continue shifting online to the benefit of Facebook, Google (Alphabet) and Criteo. The biggest risk is foreign exchange (FX) and Brexit, which could impact outlook across the group.

Amazon is now expected to beat expectations with reaccelerating top-line growth and continued market share gains. Another strength will be Amazon Web Services (AWS), despite growing competitive pressures. The company’s evolving fulfillment strategy is another strength, and Jefferies even said that Amazon may be the best-positioned large-cap internet name for the remainder of 2016.

Amazon has a Buy rating and $865 price target at Jefferies, versus a current price of $736.26 and a 52-week high of $757.34. Its consensus analyst target price is $810.87. Jefferies...