From a note to clients by analyst Daniel Ives that landed on my desktop Tuesday:
As we have seen over the last few weeks investors continue to shrug off the tech antitrust/breakup worries stemming from the much anticipated Congressional Bills heading to the House Judiciary Committee for review starting tomorrow in the Beltway and then likely head to the House for a vote on the measures. Right now there are five separate antitrust bills aimed at Big Tech to hold them accountable for anti-competitive behavior and curtailing this business practice going forward. Our discussions with investors further cement our view that unless there is law and legislative changes to current antitrust laws that the antitrust/breakup momentum will likely results in fines and business model tweaks (more restrictive M&A) rather than structural changes to FAANG names.
Our thoughts: First, the lack of consensus and divergence among both sides of the aisle on the antitrust issues remains a major issue to move things forward in this elongated investigation into the powerful grips of Apple, Amazon, Facebook, and Google. Second, despite the report/content and framework for recommendations around Big Tech players (e.g. M&A, business practices) without core law changes we believe this antitrust momentum hits a brick wall and for now is more a headline risk that investors are taking in stride.
Maintains Outperform rating and (Street-high) $185 target.
My take: Another version of yesterday’s note, which put Apple’s antitrust “overhang” at $20 a share.