Cantor Fitzgerald Expects Strong Third Quarter From Facebook

Facebook (NASDAQ: FB) is scheduled to report its third quarter results on Tuesday after market close. Youssef Squali of Cantor Fitzgerald is expecting Facebook to report $3.1298 billion in revenue, representing a 55.2 percent year over year increase. EBITDA is expected to be $2.0234 billion, representing a 64.7 percent margin. The analyst expects Facebook will earn $0.39 per share, a decrease from the $0.42 per share the company reported in the second quarter, but an increase from the $0.25 per share the company earned last year.Squali estimates Facebook's monthly average user base will increase 13.4 percent from a year ago to 1.349 billion and the ratio of daily average users to monthly average users (a measurement of engagement) to be 0.630.Squalie expects a 60.4 percent year over year increase in ad revenue to $2.8846 billion, representing a deceleration from 67.4 percent growth Facebook reported in the second quarter. The analyst adds that Facebook will see at the minimum a 50 percent growth continuing in fiscal 2015.Mobile ad revenue contribution is expected to rise to 65.6 percent in the third quarter from 62 percent in the second quarter, totaling $1.894 billion, according to Squalie's estimates. Video ads contribution will be “relatively small” but should have a “more meaningful impact” beginning in the fourth quarter.Finally, Squalie expects payments and other revenue streams to rise 12.4 percent from a year ago to $245.1 million, given management's main focus remaining on advertising.Shares are Buy rated with an $82 price target.