5 Things Bob Peck Is Watching At Facebook After Yesterday's Report
In a report published Thursday, SunTrust Robinson Humphrey analyst Robert Peck maintained a Buy rating on Facebook Inc (NASDAQ: FB), with a price target of $125, after the company reported robust 2Q results, driven by 55 percent growth and margin expansion.
Peck mentioned the following:
- Facebook’s ex-FX ad revenue grew around 55 percent y/y and 19 percent sequentially, while reported ad revenue was up 15 percent q/q, in-line with the SunTrust estimate.
- MAUs grew across all geographies and DAU penetration rose marginally to about 65 percent, with time spent per day up to 46 minutes, excluding WhatsApp.
- The company’s operating margin contracted about 500bps y/y to around 55 percent, with costs up 57 percent. Facebook achieved sequential expansion in incremental margins.
- The company reduced the high-end of its operating expense growth guidance to 55 percent from 60 percent.
- Investors focused on the back half of the year, “as roll-outs of Instagram, video, Buy button, and FAN are accretive.”
In the report SunTrust noted, “For 2015 we est. FB mobile will be ~2% of total ad revs vs. ~6% of time spent with media (assuming mobile is ~28% of time spent with media - up from 25% in '14 - and FB is ~20% of time spent on mobile). If the global ad market is ~$600B in 2015 then 6% would be a TAM of ~$36B vs. our 2015 FB mobile ad estimate of ~$12B.”
Peck expects TAM to grow to around $40B in 2016, as compared to SunTrust’s FB mobile estimate of around $18B. The EPS estimates for 2015 and 2016 have been reduced from $1.98 to $2.00 and from $2.75 to $2.76, respectively.
Although Facebook beat earnings estimates, investors seem unimpressed, with the stock down 3.87 percent at 10:09AM, the time of this writing.
Latest Ratings for FB
|Feb 2017||Pivotal Research||Downgrades||Buy||Hold|
|Jan 2017||Pacific Crest||Reinstates||Overweight|
|Jan 2017||Raymond James||Upgrades||Outperform||Strong Buy|
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