SunTrust: Facebook Is 'Investing Ahead Of The Curve From A Position Of Strength'

solidly beat consensus estimates in its third quarter earnings report on Tuesday. However, the company's guidance for higher spending in 2015 is proving to be the main takeaway from the report. Facebook's expense guidance for fiscal 2015 proved to be roughly $1 billion higher than some analysts expected. Bob Peck of SunTrust Robinson Humphrey states in a note to clients on Wednesday that Facebook's guidance will cause margin and profit forecasts to be “reined-in” as the company omitted any revenue guidance. “We note at an increment non-GAAP operating margin of 75 percent (trailing four quarter average), it only takes approximately $1.3 billion in new revenue to offset the approximately $1 billion higher spend,” Peck wrote. The analyst expects Facebook to improve its revenue base to at least $16 billion in 2015 with “nascent opportunities” in Instagram, Video, Graph Search, eCommerce, FAN, WhatsApp and LiveRail. Bottom line, Facebook's higher spend is the company “investing ahead of the curve from a position of strength,” according to Peck. Shares are Buy rated with an unchanged $90 price target.