What Wall Street Thinks Of Facebook Now

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Facebook IncFB
on Wednesday reported its
first quarter results. Here are what some of the leading analysts on Wall Street are saying. SunTrust: Plenty Of Positives, But Watch These Three Items Robert (Bob) Peck of SunTrust Robinson Humphrey commented in a note that were plenty of positive takeaways from Facebook's first quarter print. Specifically, U.S. and Canada average revenue per user rose 48 percent year over year (even though this was a deceleration from 55 percent last quarter) while global average revenue per user rose 37 percent year over year ex-foreign exchange (versus 39 percent last quarter). Peck continued that Facebook users performed one billion searches daily and the platform now boasts over two million advertisers. Moreover, Ad platform showed strong engagement. However, the analyst cautioned that the second quarter will see a greater foreign exchange headwind. Moreover, Facebook's lower spending range guidance doesn't change the fact that return on investments will take years to materialize. Finally, investors may be overestimating the timing of new products and monetization initiatives. Shares remain Buy rated with a price target raised to $100 from a previous $90. Morgan Stanley: Ad Growth And Near Record Daily Engagement Brian Nowak of Morgan Stanley commented in a note that Facebook's first quarter results reaffirmed his bullish view and its "unique" opportunity to grow its take of ad budgets by leveraging its "unmatched" global desktop and mobile reach. Nowak noted that Facebook has "impressively" delivered more than 40 million net daily active user adds every first quarter over the last five years, despite the overall daily average user base growing 2.5x in size over the same period. Put in to perspective, Facebook added roughly the same number of daily active users in the first quarter as Twitter Inc TWTR added monthly active users in all of 2014. Nowak continued that Facebook has more user data and impressions to monetize. As such, the analyst stated that Facebook will see average revenue per user growth (on a constant currency) across all of the international regions moving forward. Shares remain Overweight rated with a price target raised to $94 from a previous $90. Barclays: Engagement Continues To Improve Paul Vogel of Barclays commented in a note that Facebook's user engagement continues to impress. The analyst noted that the ratio of daily active users to monthly active users (DAU/MAU) rose to 65 percent in the quarter (77 percent in the U.S.) with over 900 million users visiting Facebook every day. Vogel continued that with an overall user base of over 1.4 billion, Facebook's engagement ratio is roughly two times more than other companies whose DAU/MAU ratio stands at 40 percent or below. The analyst also added that Facebook's mobile users are increasingly accessing video through the platform, leading to higher levels of engagement, advertising and average revenue per user – all key trends given the fact that Video will be a big driver of revenue upside in the future. Shares remain Overweight rated with an unchanged $98 price target. Credit Suisse: Uneventful Quarter… But Nothing Wrong With That Stephen Ju of Morgan Stanley commented in a note that Facebook's earnings report contained "relatively few surprises." The analyst noted that the highlight of the report was the acceleration in the foreign-exchange neutral growth rate for Facebook's advertising revenue in Europe. Ju continued that Facebook's European revenue accelerated due to rising adoption of ad units which have already gained "wide adoption" in North America. However, there is still a wide gap (2.7x) in monetization/average revenue per user between North America and EU (and an even wider gap between North America and the rest of the world) which "speaks to the wide open opportunity" Facebook faces. Ju also added that Facebook remains a "top pick" for 2015. Shares remain Outperform rated with an unchanged $106 price target.
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Posted In: Analyst ColorAnalyst RatingsBarclaysBob BeckBrian NowakCredit SusseFacebookInstagramMorgan StanleyPaul Vogelsocial mediaStephen JuSunTrust Robinson Humphrey
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