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Merrill Lynch’s Top 4 Internet Stocks for the Second Half of 2017

The technology sector has seen a big boom over the course of the past year, with the Technology Select Sector SPDR ETF (NYSEMKT: XLK) up over 25% in this time, beating out the broad markets. Even looking forward, the sector is poised to beat out the markets for the rest of 2017. With that much confidence tech stocks have to be doing something right, and analysts are picking up on it.

Merrill Lynch singled out a group in the sector that the firm believes will outperform going forward — specifically, internet stocks.

In the mega-cap category, the firm highlighted Facebook Inc. (NASDAQ: FB) for potential ad pricing growth, Instagram strength and signs of approaching messaging monetization. In large cap, Merrill Lynch likes Expedia Inc. (NASDAQ: EXPE), given it has the best opportunity to accelerate growth compared to its peers.

In the small/mid-cap group, IAC/InterActtiveCorp (NASDAQ: IAC) is the top pick on relative valuation as it is currently trading at a negative implied enterprise value (EV) based on its ownership in new entity Angie’s Homeservices and Match.

For year-to-date underperforming stocks with the negative sentiment and higher risk, Merrill Lynch likes Yelp Inc. (NYSE: YELP) for opportunity to accelerate paying account adds.

Merrill Lynch went further in detail on each.

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