Wall Street analysts believe the so-called “FANG” stocks — Facebook, Amazon, Netflix and Google-parent Alphabet — are set for significantly slower price growth over the next year than investors have grown accustomed to from the bull market momentum leaders.
CNBC looked at the average 12-month stock price forecast for each FANG member and calculated the return to that target for each stock. Taking the average of those expected returns, Wall Street expects the group will appreciate just 5.4 percent in price over the next 12 months, a far cry from the average return of 64.5 percent from the group the previous 12 months. It’s also a much more bearish outlook than typical from the Wall Street analyst crowd.
The average Wall Street analyst believes that, over the next year, Netflix shares will return just 2 percent, Amazon shares will return 4.7 percent, Alphabet shares will return 6.1 percent and Facebook shares will return 8.8 percent.
The group has widely been hailed as leaders in the broader stock market over the past year, with consistently high advertising revenue as well as subscriber and user growth pushing shares of the tech-heavy group to all-time highs.
Facebook and Amazon, which both notched new intraday highs on Monday, are up 29.8 percent and 80 percent, respectively, over the last year; Netflix, the leader of the group is still up 125 percent over 12 months. Amazon, Netflix and Microsoft, meanwhile, are responsible for roughly 70 percent of S&P 500 returns and for 78 percent of Nasdaq 100 returns.
The latest analysis comes just days after some Wall Street analysts, including J.P. Morgan Chase’s Doug Anmuth, cautioned investors that the acceleration in the price of Netflix shares meant that the stock was likely closing in on a fair value. At the time, shares of Netflix had already exceeded the analyst’s 12-month price target.
Following Anmuth’s note, the internet television and film streaming platform reported financial results on Monday that disappointed investors with softer subscriber growth both within the U.S. and overseas. Shares of Netflix fell 12.3 percent Tuesday, on track for their worst day in nearly two years.
Commenting on his newly reduced Netflix price target, Deutsche Bank analyst Bryan Kraft said that “despite continuing to like the story, we just don’t see much upside over the next 12 months at this valuation level.” The analyst cut his rating on Netflix shares to hold from buy while paring his target price to $350 from $360.
Source: Tech CNBC
After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group