SunTrust's Bob Peck Reacts to Facebook Earnings

In a note this morning, SunTrust’s Bob Peck is reiterating his buy rating and $90 price target in Facebook Inc FB. Peck points to Facebook’s year-over-year 55 percent increase in average revenue per user (ARPU), a key measure that Peck said was a “tough comp,” as an example of how Facebook is delivering. Pricing remained strong, and Facebook achieved 22 percent sequential advertising revenue growth versus expectations of 18 percent. 

Peck identified three “items to watch” moving forward. Despite gains on mobile, desktop still account for 29 percent of revenues. He also points to international ARPU, which saw growth rates decline 13-16 percent q/q. Finally, he notes that CAPEX guidance has moved slightly higher.

SunTrust expects Q1 FY15 revenues at $3.4 billion with EPS of $0.40. For all of FY15, the analysts see EPS of $1.94 on $16.5 billion in revenue. Their price target represents a valuation of 46x this year’s earnings.