Market Overview

Analysts Feel Facebook Is Still On The Right Track For Long-Term Growth

Share:

Facebook Inc (NASDAQ: FB) reported earnings Tuesday and surprised some investors by announcing an increase in spending.

Shares fell approximately 6 percent Wednesday, trading at $75.86.

Analysts were largely pleased with Facebook's decision to increase investment. Most modestly lowered their price targets, but felt that the company is on the right track for long-term growth.

Below are analyst reactions along with current ratings and price targets.

Canaccord - Buy, $88 price target

"Facebook reported another strong quarter, with modest revenue upside and strong user engagement and monetization improvements...we continue to believe Facebook is early in monetizing its vast audience and that further progress will keep revenue estimates moving higher."

CRT - Buy, $84 price target

"FB plans to ramp up non-GAAP expenses by 30-35 percent this year, and up 50-70 percent next year. This would imply over $2B in incremental operating expenses. We’ve noted all along that FB’s operating & EBITDA margins were too high relative to its peers. FB is going in investment mode in 2015, which we believe is the right strategic move - investing in its core business, ad tech suite, new apps, and WhatsApp and Oculus acquisitions."

Pivotal Research Group - Buy, $103 price target

"Solid 3Q14 figures were overshadowed by new guidance around 4Q14 and 2015 expense trends above expectations. Although guidance should have a negative impact, investors should feel confident that incremental investment should help support sustained growth. Further, margin compression should not meaningfully alter the long-term incorporated into our model."

Barclays - Overweight, $83 price target

"We see a number of catalysts that should continue to drive revenue growth well beyond 2015 (video, Atlas, Instagram). While the cost increase is aggressive, we see few names in the space with similar long-term opportunities as FB and believe the company has historically spent ahead of monetization, which it is also doing somewhat in this case."

Stifel - Buy, $94 price target

"Facebook reported solid 3Q 2014 results but guided for a significant increase in investments for 2015. We believe the company is investing from a position of strength to drive future growth, investing in the core Facebook and Instagram platforms, newer areas such as Ad Tech (LiveRail, Atlas, and Facebook Audience Network), messaging (Facebook messenger and WhatsApp), and Oculus. We are reducing our price target from $99 to $94 but believe the long-term fundamental story remains intact."

FRB & Co. - Outperform, $84 price target

"FB’s strategy appears to be driving toward the development of a portfolio of apps, each designed to do one thing really well and each reaching 1 billion+ people before throttling forward on commercialization.  Over the next three years, FB's goal is to grow and serve its communities and serve its business partners well to create value. The five year plan calls for scaling Instagram, What’sApp, Messenger, and Search and helping them become businesses in their own right."

Pacific Crest Securities - Sector Perform, no price target

"Facebook's results in the past year have been beyond impressive and far better than we expected. Still, with tough comparisons and higher spending, we think the combination of significantly decelerating revenue growth and margin deleverage makes it hard for investors to get much morebullish, especially with already high expectations from video, Instagram and the ad network."

Deutsche Bank - Buy, $90 price target

"Facebook reported strong 3Q revenue and EBITDA, which were 4 percent and 3 percent above consensus. The company’s guidance, which given the history we view as base case (not bull), captures similar 2-year growth in ad revenue (ex-fx) at the high end. The down 10 percent aftermarket reaction seems appropriate given the earnings reactions across all of high multiple internet companies in 3Q, and the upcoming ~180m shares from WhatsApp that could hit the tape shortly. We would add on  weakness over the coming several sessions, as we continue to view FB as one of the best names in the space, straddling both high growth and a reasonable multiple."

Latest Ratings for FB

DateFirmActionFromTo
Sep 2019Initiates Coverage OnBuy
Aug 2019AssumesBuy
Jul 2019MaintainsOutperform

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Barclays Canaccord CRT Deutsche BankAnalyst Color Earnings Analyst Ratings Trading Ideas

 

Related Articles (FB)

View Comments and Join the Discussion!

Akamai Technologies' Q3 Beats Views On 24% Revenue Growth

Fast Money Traders Share Their Views On Facebook