SocGen On Internet: Still Prefers Alphabet Over Facebook

• Facebook Inc FB shares have lost 8 percent since January 4, while shares of Alphabet Inc GOOGL are down 4 percent.
• Societe Generale’s Simon Baker maintained a Sell rating for Facebook, while raising the price target from $68 to $71.
• While Facebook’s long-term growth prospects have improved, it faces several risks, Baker stated.

Analyst Simon Baker mentioned that while Facebook’s shares have appreciated 26 percent in the last 12 months, Alphabet’s shares are up 36 percent.

Facebook’s long-term growth prospects have improved, resulting in an upward revision of 4 percent and 12 percent of the FY15 and FY16 EPS estimates. The company’s momentum has continued with 1.55 billion monthly users as on September 2015, although this is already reflected in the share price, Baker said.

Facebook continues to face risk from new applications competing for user time, a slow decline in its user momentum, the need for potential sustained investment dampening its margins and diversion of capital to fund acquisitions, the analyst commented, while adding, “We reiterate our Sell rating on Facebook and preference for Alphabet in this space.”