Tech Sector Ending Narrowly Higher; Morgan Stanley Reduces Outlook for Internet Stocks

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Technology stocks are narrowly higher with shares of technology companies in the S&P 500 climbing just 0.1% in late-afternoon trade.

In company news, Internet stocks - including Facebook ( FB ) and Google ( GOOG ) - are lower today following a downgrade of the sector to In-Line from Attractive at Morgan Stanley, believing those stocks are likely due to soon cool down after an extremely strong run in recent months.

"We see a more balanced risk-reward following strong performance," analyst Scott Devitt wrote in a new research note Monday. That performace included a combined 57% rise for stocks in the Morgan Stanley Internet universe year to date. By comparison, the Nasdaq Composite index is up 28% in 2013.

"Outperformance has been driven by multiple expansion rather than positive estimate revisions," he continued, concluding he believes current valuations "could be full despite strong secular trends."

FB shares are down 2.4% at $46.37 today while GOOG is off 0.3% at $1,013.31 a share after Morgan Stanley dropped the stock from its Best Idea list. The research shop also includes Amazon.com ( AMZN ), eBay ( EBAY ), LinkedIn ( LNKD ), Priceline (PCLN), Groupon (GRPN), Pandora Media (P), Zynga (ZNGA), WebMD Health (WBMD) and OpenTable (OPEN) in its Internet sector grouping.

In other sector news,

(+) GOGO, Net loss widens from year-ago to $0.22 per share but still beats analyst forecasts by $0.09. Revenue for the in-flight wi-fi service provider rises 48% year over year to $85.4 mln, topping estimates by $8.56 mln.

(-) CRUS, Barclays issues research note saying Apple (AAPL) has stopped using the company's amplifers in its iPad Air tablets, eliminating as much as $40 mln in yearly revenue. Also, CEO Jason Rhode last week sells over 100,000 of his CRUS shares.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: AMZN , EBAY , FB , GOOG , LNKD

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