Morgan Stanley Raises Facebook's Price Target To $150, Praises Mobile Ad Growth

Facebook Inc FB reported its quarterly results ahead of expectations. The results reflect the platform's advertising strength and that the company is still in the early stages of its monetization potential, Morgan Stanley’s Brian Nowak said in a report. He maintained an Overweight rating on the company, while raising the price target to $150.

Facebook’s ad revenue was 4 percent ahead of expectations, driven by strength in North America. Adj. EPS came in 11 percent higher than expected. As users and engagement continue to grow and as Facebook continues to improve its ad tools and offerings, the company’s monetization potential would increase, Nowak mentioned.

Snapchat Concerns Addressed

While investors had been concerned about Facebook’s results being negatively impacting by Snapchat, the former company delivered better-than-expected advertising revenue, the highest 2Q daily user growth in 5 years and rising time spent per user, analyst Brian Nowak noted.

Facebook’s base of daily active users [DAUs] reached 1.1bn, up 37mn sequentially, and representing the highest DAUs added during the second quarter since 2Q11. Time spent per daily user across Facebook, Instagram and Messenger rose double digits y/y.

The adj. non-GAAP EPS estimate for 2017 and 2018 have been raised by 5 percent to $5.15 and by 6 percent to $6.39, respectively, to reflect the 2Q beat, lower opex, and lower tax rate.

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