Cantor Fitzgerald Expects Strong Third Quarter From Facebook

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.