'After a year to forget' JPM sees opportunities arising in European internet

Adevinta ASA

02/12/2022 12:45

** J.P.Morgan sees opportunities arising in the European
internet sector in 2023 after a rather challenging 2022
    ** Visibility on rates developments remain low going into
2023, but after a material reset of expectations and easing
comparables, the outlook for the sector is improving, it says
    ** JPM picks names with compounding earnings growth despite
macro headwinds, attractive valuation relative to other sectors,
healthy profitability and cash flow (CF) levels, scope for M&A,
limited consumer exposure going into 2023
    ** It highlights online classifieds as its favorite
sub-sector, a space that is highly profitable and cash
generative
    ** JPM's top picks, all "overweight"-rated, are Scout24
 G24n.DE , Auto1  AG1G.DE , Delivery Hero  DHER.DE , Future
 FUTR.L , Kahoot!  KAHOT.OL 
    ** It upgrades Just Eat Takeaway.com  TKWY.AS  to "neutral"
from "underweight" as the recent disposal of iFood has resolved
much of the concern around the company's balance sheet
    ** The broker cuts Adevinta  ADEA.OL  to "neutral" from
"overweight" as the company scans less attractive on a relative
basis versus peers given its leverage     
    ** JPM downgrades THG  THG.L  to "underweight" from
"neutral" seeing limited M&A potential, relatively low
profitability, risk of earnings downgrades, and a high leverage
ratio
 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))