Evercore adds NFLX, DASH to TAP list, drops EXPE, SNAP

On Monday, Evercore ISI updated its Tactical Outperform (TAP) and Underperform (U/P) lists, making notable adjustments in its coverage of internet stocks. Netflix (NASDAQ:NFLX) and DoorDash (NYSE:NASDAQ:DASH) have been added to the firm’s TAP Outperform list, signifying a positive outlook on these stocks. Conversely, Expedia (NASDAQ:EXPE) and Snap Inc . (NYSE:SNAP) have been moved to the Tactical Underperform list, suggesting a less favorable view. InvestingPro data shows SNAP trading at $7.96, down 26% year-to-date, with its next earnings report due April 29. While the company maintains strong liquidity with a current ratio of 3.95, it faces profitability challenges.

Evercore’s analysis provided three key points regarding the internet sector. The firm highlighted that, excluding Amazon (NASDAQ:AMZN) and Shopify (NYSE:NASDAQ:SHOP), the sector has minimal direct exposure to tariff risk. However, the cyclical risk of a recession is more pervasive, with Evercore’s house view indicating that recession risk has increased to 40%. For SNAP specifically, InvestingPro analysis reveals 7 additional key insights about the company’s financial health and growth prospects, available to subscribers.

The median large-cap internet stock has seen a decline of approximately 20% since mid-February, leading to a growing list of what Evercore terms ’DHQs’—stocks trading at deep historical discounts. Amazon, Meta Platforms (NASDAQ:META), and Alphabet (NASDAQ:GOOGL) have all seen significant price drops and are trading at what the firm considers trough valuations.

Despite the attractiveness of picking at these deep historical discounts as a stock-picking strategy, Evercore advises caution in the near term. The firm recommends leaning into names that are more recession-resistant, such as Netflix, Spotify (NYSE:SPOT), and potentially Uber (NYSE:UBER) and DoorDash, which could offer more stability in the current economic climate.

In other recent news, Snap Inc. has been the focus of several analyst reports and a new partnership announcement. JMP analysts have maintained a Market Outperform rating for Snap, though they lowered the price target from $16.00 to $14.00, citing revised financial performance estimates. Meanwhile, TD Cowen has reduced Snap’s price target from $12.00 to $10.00 due to macroeconomic concerns, despite observing a 12% year-over-year increase in digital advertising growth. Guggenheim’s analysis pointed out a modest deceleration in Snap’s global audience reach growth, with a sequential net addition of 6 million Daily Active Users in the first quarter, the lowest since 2019.

Additionally, Snap has partnered with Later, a company specializing in influencer marketing and social media management, to enhance tools for content creators and marketers on Snapchat. This collaboration introduces new capabilities for discovering creator profiles and scheduling content. Snap’s management does not expect significant disruption from the new Simple Snapchat feature, which remains in beta. The partnership aims to streamline influencer marketing and enhance brand partnerships on the platform.

These developments come as Snap continues to navigate challenges in user engagement and financial performance, with analysts closely monitoring the company’s strategies and market conditions.

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