Anmuth started Google, Netflix, and Amazon.com with Buy ratings, while starting Yahoo! and eBay with Neutral ratings.
Both e-commerce and online advertising have lots of runway, he thinks, with online sales just 9% of total U.S. retail and digital ads making up just 18% of total ad spending.
“As smartphone penetration moves beyond the current ~30% global penetration rate, we expect mobile to have an even bigger impact on Internet business models,” writes Anmuth.
Moreover, he sees a premium for growth: just 9% of companies in the S&P 500 index have revenue growth above 15%, and those companies’ stocks trade at a 60% premium to the rest of the index members.
The increase in smartphone usage, he thinks, is accelerating, as mobile dataspeeds are rising faster than fixed-line Internet speeds. He notes that in places such as sub-Saharan Africa and Southeast Asia, the total number of mobile data users should exceed the number of people on the electrical grid by the end of this year. Mobile data traffic is now three times the size that fixed-line Internet use was in 2000, judged by volume of monthly traffic (237 petabytes a month for mobile versus 75 petabytes a month in 2000 for fixed-line Internet use.)
But Anmuth’s larger concern are the platform wars between Google, Apple , Amazon, Netflix, Facebook, and eBay.
He describes these leaders, in his view, as follows:
We believe the Internet ecosystem is largely settling around a few select companies that will provide the foundation for application development over the next several years. We believe Amazon, Apple (covered by J.P. Morgan IT Hardware analyst Mark Moskowitz with an Overweight rating), Google, Facebook, and eBay are emerging as primary platforms on top of which large amounts of online/mobile communications, advertising, and commerce are likely to be conducted.
Anmuth gives Google a $660 price target. The company is taking “significant share in higher growth advertising markets,” he writes.
Amazon’s investments in e-commerce, and in its “Amazon Web Services” should lead to “outsized revenue growth in the second half of 2011 and 2012,” he thinks, and he assigns a $251 price target.
Netflix has “considerable room” to expand its streaming video offering from the U.S. to overseas markets. That’s not a “lay-up,” but then there’s not a lot of international competition, he thinks, and the company has a good track record of executing on its plans.
In today’s trading the stocks are doing thusly:
Google shares are up $7.51, or 1.4%, at $541.52; Netflix shares are up $7.53, or 2.6%, at $298.80; Amazon shares are up $3.15, or 1.5%, at $214.38.
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