Today: Another analyst joins the chorus of experts suggesting the recent downturn in tech stocks has brought about a buying opportunity. Also: Google gains despite European court ruling.
The Lead: Tech stocks' depreciation makes them affordable, analyst says
Analysts continued to play catch-up with the recent downturn in tech stocks Tuesday, as Citi analyst Mark May reported that the bank's small index of large Internet companies had hit its most affordable point in more than two years of existence.
"We believe the recent pullback represents a particular opportunity among large cap Internet stocks, with multiples having retraced to levels not seen for more than two years with no/little change in fundamentals," May wrote in a note.
May noted that the bank's large-cap Internet index -- which includes seven companies total and five from Silicon Valley -- had dropped 18 percent from its peak price, reached March 5, part of a downturn that has affected post-IPO tech companies to a greater degree and sent several formerly high-flying valley tech companies into a bear market and beyond.
For the larger companies, however, the decline brought down ratios that compare financial performance to stock prices, leading May to suggest that they now offer investors "growth at a reasonable price."
The two most prominent Silicon Valley stocks May focused on were Google and Facebook, which have declined 11.9 percent and 17.6 percent from their 52-week highs respectively. Along with Amazon, May called the stocks "just what the portfolio doctor ordered."
"We believe this pullback not only creates an opportunity but has positioned large cap Internet stocks well relative to the key factors many portfolio managers are seeking in today's market," he wrote.
May's note is likely to be one of a flurry, as analysts react to the massive pullback in tech stocks amid an earnings season that has produced few Silicon Valley surprises but extreme volatility on Wall Street. On Monday, some of the region's most affected stocks received backing from analysts that helped shore up their prices.
SV150 market report: Google gains despite European court ruling
Wall Street hit more records but barely moved Tuesday despite May's calls to buy Internet stocks, as any possible boost to Google from May's note could have been offset by a European court ruling that could have long-term effects on the world's leading search engine.
The highest court in Europe ruled Tuesday that residents should be able to control some of what appears when their name is searched, a concept known as "the right to be forgotten." The ruling stems from a case in Spain involving a 1998 newspaper notice of a home being auctioned due to the man's unpaid welfare debt; while the debt was settled, the notice remained and appeared in Google searches. "If Google was great before, it's perfect now, because there are game rules to go by," the plaintiff, Mario Costeja, said Tuesday. Mountain View-based Google, which gained 0.6 percent to $541.54 Tuesday, said it was disappointed in the ruling and now faces a possible rush of requests for removal of links.
Oracle fell 0.1 percent to $41.89 as its appeal of the final result of a fight with fellow software titan SAP suggested that a new trial on damages could be forthcoming. Facebook stayed at $59.83 while reportedly plotting an office in China and receiving positive feedback on the efficacy of Instagram advertisements. Founder and CEO Mark Zuckerberg will celebrate his 30th birthday Wednesday while facing a lawsuit from a Bay Area real estate developer. Rival Twitter dropped 1.6 percent to $33.39 while planning a $1 million initiative to help San Francisco's homeless, and Yelp dropped 1.9 percent to $55.53 while offering a free OpenTable rival to restaurants.
NetSuite dropped 2.5 percent to $74.87 as CEO Zach Nelson kicked off the cloud-software company's SuiteWorld with announcements of new contracts and sniping at Pleasanton rival Workday, which fell 0.6 percent to $72.03. Cisco declined 1.4 percent to $22.86 a day ahead of its scheduled earnings report, and eBay moved 0.5 percent higher to $51.58 as CEO John Donahoe reiterated the San Jose company's forecasts. Apple added 0.2 percent to $593.76 as a Menlo Park company's report showed the Cupertino company to be the most sued company in patent beefs, while Tesla Motors added 3 percent to $190.16.
Up: NetApp, Tesla, Zynga, AMD, Hewlett-Packard, Google, Netflix, eBay, SolarCity
Down: Splunk, LinkedIn, Salesforce, Yelp, Applied Materials, Twitter, Nvidia, Cisco, VMware, SunPower, Pandora, Electronic Arts, Workday, Intuit
The SV150 index of Silicon Valley's largest tech companies: Down 1.95, or 0.14 percent, to 1,397.05
The tech-heavy Nasdaq composite index: Down 13.69, or 0.33 percent, to 4,130.17
The blue chip Dow Jones industrial average: Up 19.97, or 0.12 percent, to 16,715.44
And the widely watched Standard & Poor's 500 index: Up 0.80, or 0.04 percent, to 1,897.45