Bob Peck Lowers Facebook's Price Target To $120, Expecting Strong Finish To 'Stellar' Year

• Facebook Inc FB shares are down 6.74 percent over the past month, to 90.16 on January 20.
• Robert S. Peck of SunTrust Robinson Humphrey has maintained a Buy rating on the company, while lowering the price target from $125 to $120.
• Industry checks indicate that the company might report strong growth for Q4 as well, driven by mobile.

Analyst Bob Peck expects 20 percent quarter-on-quarter ad revenue growth, modestly ahead of the consensus for Q4 and in-line with the estimate. Checks also suggest strong click through rates and low CPCs, along with improving mobile pricing and volume.

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“Spend on video ads is particularly strong; more so on mobile,” Peck said, while expecting investor focus to shift to growth in video, Instagram and Oculus, as well as the spend guide, heading into 2016.

“We think FB could begin the year on a conservative note, much like 2015, and wouldn't be fazed if the headline numbers are higher than our 43 percent projection on nonGAAP expense growth,” Peck noted.

According to the SunTrust report, Facebook’s rollout of Instagram to its 2.5 million advertisers could drive revenues up by more than $2 billion by 2017.

In addition, Virtual Reality (VR) is expected to be “the future of computing with a large TAM and the potential to disrupt several diverse businesses.”