Facebook's Q4: Conference Call Tone Matters More Than Results

Facebook Inc (NASDAQ: FB)'s fourth quarter earnings report will be closely watched this week as the social media empire will need to demonstrate there is plenty of room ahead for continued growth.

Lloyd Walmsley of Deutsche Bank is expecting Facebook to report advertising revenue of $8.416 billion (versus the Street's $8.303 billion estimate) and total revenue of $8.618 billion (versus the Street's $8.512 billion estimate).

The analyst's ad revenue estimate implies 50 percent growth ex-FX, while mobile ad growth is expected to be higher by 60 percent year-over-year ex-FX.

However, perhaps more important to investors than the actual numbers is management's tone during the post earnings report conference call. Walmsley noted that expectations are calling for management to display continued caution on ad loads and growth and around operating expenditure.

Walmsley said any improvement in the cautious tone relative to prior calls would send Facbeook's stock higher.

Looking beyond the fourth quarter's print and conference call, the analyst sees three key factors for Facebook to grow its eCPMs (effective cost per mille) over time, including:

• Pure price can grow given strong ROIs among advertisers.
• Shift to higher priced video ads.
• Better CTRs driven by more adoption of targeting tools and better ad creative designed for the platform's news feed.

Shares of Facebook remain Buy rated with an unchanged $150 price target. The stock traded recently at $130.37.