J.P.Morgan sees European internet revival shaping up after bleak H1

Stroeer SE & Co KGaA

06/12/2023 09:03

** J.P.Morgan sees a brighter outlook for Europe's internet
sector even though the industry has barely recovered from its
losses in the first half of the year
    ** The broker expects strong improvements in profitability &
cash flow, falling bond yields and increasing M&As to help the
internet companies recover in 2024
        ** It sees bond yields as a key driver for the sector,
as falling yields should offer upside for internet equity
valuations
    ** Steadily rising interest rate expectations and a rigorous
management focus on savings hit the sector in H1, while consumer
budgets shrank, the broker says
    ** The broker names Delivery Hero  DHER.DE  as its top pick
and adds the German online food ordering group to its Analyst
Focus List, citing significant improvement in profitability at
low valuation
    ** JPM downgrades Scout24  G24n.DE  from "overweight" to
"neutral" on growing concerns around the competitive landscape
following CoStar's entry into UK property classifieds space
    ** It also warns of low visibility for the online
classifieds group in Europe, along with limited near-term
catalysts
    ** Other broker's top picks are: Hellofresh  HFGG.DE , CTS
Eventim  EVDG.DE , Trainline  TRNT.L , Stroeer  SAXG.DE  (raises
to "overweight", placing on Positive Catalyst Watch),  Ocado
 OCDO.L  (raises to "neutral"), Auto1  AG1G.DE  (raises to
"neutral" from "overweight")

 (Reporting by Mateusz Dobrzyniewski)
 ((Mateusz.dobrzyniewski@thomsonreuters.com))