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Facebook Is 'Consistently Executing,' According To Goldman Sachs

Facebook Is 'Consistently Executing,' According To Goldman Sachs

Previewing the third-quarter results of Facebook Inc (NASDAQ: FB), Goldman Sachs said the company is consistently executing. The company is scheduled to release its earnings on November 2.

3Q Expectations

Analyst Heather Bellini modeled non-GAAP earnings of $1.02 per share and total revenues of $7.05 billion. This, according to the analyst, is ahead of the consensus estimates that call for non-GAAP earnings of $0.96 per share and revenues of $6.90 billion.

Goldman's channel checks revealed strength in Facebook spend, a healthy e-commerce vertical and no material pushback from customers regarding the video ad measurement issue.

Findings From Checks

  • Ad spend tracked to $600 million, plus.
  • Same advertiser spend was up 60 percent year-over-year.
  • E-commerce momentum continued throughout the year, offering scope for a strong holiday season.
  • CPMs ranged between -3 percent to 5 percent sequentially, with Goldman's estimate at 1 percent sequential gain.

Related Link: Facebook's Zuckerberg Breaks The Silence On Fellow Board Member And Trump Supported Peter Thiel

Unloading Ad Load

Given that the last time Facebook began emphasizing limiting ad load in the second quarter of 2013, it saw revenue growth to 82 percent in the first quarter of 2014 from 61 percent in that quarter, Goldman expects the company to shed light on ad loads on the call.

The firm noted that the Street is estimating ad revenue growth to slow down to 36 percent in the third quarter of 2017 and 34 percent in the fourth quarter of 2017 from 47 percent in the fourth quarter of 2016.

Maintaining Rating, Price Target

Goldman maintains it Buy rating and $162 price target on the shares of Facebook.

In pre-market trading, shares of Facebook were up 1.20 percent at $130.11.

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Latest Ratings for FB

Mar 2020Morgan StanleyMaintainsOverweight
Mar 2020UBSMaintainsBuy
Mar 2020CitigroupMaintainsBuy

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