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5 Things Bob Peck Is Watching At Facebook After Yesterday's Report

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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

DateFirmActionFromTo
Feb 2017Pivotal ResearchDowngradesBuyHold
Jan 2017Pacific CrestReinstatesOverweight
Jan 2017Raymond JamesUpgradesOutperformStrong Buy

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: SunTrust Robinson HumphreyAnalyst Color Reiteration Analyst Ratings

 

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