Following the call, MGM shares rose 2.5 percent in premarket trading.
According to the firm, sports betting and iGaming will be a combined $38 billion market in 2030, with MGM holding a sizable market share in both. According to Bernstein, MGM has the No. 3 online sportsbook and is the No. 1 in iGaming in terms of daily active users.
According to Bernstein, MGM should benefit from a liquidity boost from real estate sales, which could help the company find more projects with upside.
MGM shares have gained 34% year to date, outperforming the market, and were trading higher in premarket trading on Monday.
MGM China was also upgraded to outperform from market perform by Bernstein.
In a note to clients, a team of Goldman analysts led by Eric Sheridan initiated coverage of the internet sector, stating that they expect more growth but that some stocks may be overpriced.
“In our opinion, the industry continues to have ample opportunities for secular revenue growth and increased operating efficiencies as a result of building scale in the coming years,” the note stated. “That being said, we are not uniformly bullish because many companies, in our opinion, have forward growth that is more than priced into their equity at current levels, and/or we see a more neutral/negative risk/reward in a handful of names.”
Goldman used a ten-factor framework to evaluate sector stocks, which included market share dynamics, unit economics, and regulation.
The firm assigned buy ratings to seven stocks, including Big Tech behemoths Amazon, Alphabet, and Facebook, which Goldman believes will continue to outperform even as some of these tech business models converge.
“We see Facebook as one of the companies most exposed to the theme of the blurring of the lines between commerce and advertising, and many of its key properties have already begun the transformation to embrace social commerce,” according to the note.
Goldman also gave buy ratings to Snap, Uber, Lyft, and Expedia, saying that some of its internal improvements should pay off as the travel industry recovers from the pandemic.
“We are optimistic about Expedia’s medium/long-term operating margin trajectory as a result of management’s actions addressing its less efficient cost structure and levels of spending in the last 3-5 years (pre-COVID),” the note stated.
On the negative side, Goldman gave Airbnb and Twitter sell ratings.
Goldman believes Twitter is unlikely to meet its stated revenue targets. According to the firm, Airbnb’s stock appears to be expensive given the uncertainty surrounding the travel sector’s recovery, among other factors.
Barclays best stocks list
Given a company’s earnings and other financial fundamentals, value stocks are thought to be undervalued.
Barclays European equity strategists stated in a research note last week that there are two compelling reasons to own value stocks right now.
For starters, they tend to behave cyclically – that is, they align with the health of the global economy – and thus should benefit from economic reopening. Second, because of “how cheap” they are, as well as their ability to outperform inflation.
“It is the best inflation hedge of all the factors, and we expect inflation to remain stickier than the market expects in H2,”
“On balance, we believe Value should be held OW [overweight], especially since our Value basket is exhibiting differentiating behavior, even as rates fall over the summer. It has not been overbought or oversold.”
In August, eurozone inflation reached a 10-year high, with consumer prices rising 3% year on year.
Inflation hedges are designed to protect investors from the downside risks of higher inflation, and they frequently involve stocks backed by assets that may appreciate in value.
German copper producer Aurubis, French automotive supplier Faurecia, German kidney dialysis company Fresenius, French lender Societe Generale, Finnish telecoms giant Nokia, Britain’s BT Group, and French petroleum storage company Rubis were the seven new stocks added to Barclays’ value basket.
These replaced Acerinox, Renault, Korian, AXA, Sopra Steria, Orange, and Iren.
It comes after the bank’s European equity team announced last week in a separate note that it had swapped its overweight position in technology and mining stocks for luxury and autos.
“Equities have already transitioned to a mid-cycle regime and are no longer priced for perfection,” Cau wrote in the note. “Slowing growth warrants a Quality tilt, but we see some Value/reflation plays with catch-up potential after the summer reset.”
Goldman Sachs likes tech stocks
“We enter the Fall incrementally more positive on the Software industry given an increasingly strong demand environment and improving fundamentals,”.
Goldman observed an increase in new business as a result of demand from clients undergoing digital transformations, as well as higher margins as businesses sell their products virtually. “We see a supportive set-up for software stocks in the near term,” the analysts said, adding that the stocks they cover are up 21% year to date on average, compared to the Nasdaq, which is up 18%.
Stocks on the Conviction List
The bank is “increasingly more bullish” on three conviction list stocks, claiming that Microsoft is “well-positioned” to more than double its $60 billion cloud business, which includes Office 365 and LinkedIn’s commercial arm. Last month, the company announced that it would raise the prices of some Office365 subscriptions.
“We continue to expect Microsoft to post double-digit top-line growth for several years to come, accompanied by margin expansion,” they added.
Salesforce is also on Goldman’s list of convictions, and the bank believes it will benefit from the pandemic’s accelerated shift to digital customer experience. “The company’s robust and strategically built product portfolio, which spans sales, service, marketing, ecommerce, analytics, artificial intelligence, customer applications, integration, and collaboration, covers virtually all aspects of Digital Transformation,” Goldman added. Salesforce raised its full-year guidance last month after acquiring messaging app Slack.
ServiceNow, an IT support firm, is the third software company on Goldman’s conviction list, with the firm set to benefit from a “very large” total addressable market of an estimated $175 billion in 2024, according to the bank. “We remain bullish and believe the risk/reward skew is positive,” said the analysts.
Goldman Sachs’ top picks
Workday, a human resources software company, is set to benefit as companies migrate their legacy systems online, according to Goldman, who is bullish on the stock. “With vaccines becoming more widely available, we believe that corporations are preparing to revisit strategic investments relevant to Workday’s products,” the analysts said, adding that this pent-up demand is likely to stimulate growth in 2022.
Company that makes work management software According to Goldman, Monday is a “leader” in its market and is “well positioned to capitalize on the growing need to adopt workplace collaboration and productivity tools.” In June, Monday was listed on the Nasdaq.
According to Goldman, which has a buy rating on Adobe stock, the company is poised to benefit from the digital transformation trend. Analysts like its retention and renewal rates, which are higher than pre-pandemic levels, as well as growth in products such as Acrobat and Document Cloud. “The unprecedented pace of digital transformation underpinning the Digital Experience business, the long-term shift from paper to digital document management, and the surge in content creation,” the analysts wrote.
Snowflake, a data warehouse, is also a good buy for the bank because of its “strong competitive positioning,” “best in class growth,” and new customers — it now has 42 percent of the Fortune 500 as clients. “As Snowflake’s cloud-native data platform continues to replace incumbent data warehouse solutions, we see a long runway for continued growth with new and existing customers,” Goldman said.
ZoomInfo, a company that assists marketing teams in reaching customers (not to be confused with video chat company Zoom Video), was the coronavirus pandemic’s first IPO. Goldman emphasized its operating margins of more than 40%, as well as its 57 percent year-over-year growth in the second quarter of the year, compared to 46 percent in the first quarter.