Facebook Delivers Sweet Results, Bitter Expense Outlook

Lloyd Walmsley of Deutsche Bank earns the title for using the best metaphor to describe Facebook Inc FB's fourth quarter results: "as sweet as cookie layer crunch but bitter initial cost outlook."

In a report, Walmsley reiterated a Buy rating on Facebook's stock with a price target boosted to $155 from $150. The analyst cited his continued bullish stance based on the belief that the Street's revenue estimates will likely move higher throughout the year while operating expenditure estimates will move lower.

Walmsley noted that while Facebook again warned its ad revenue growth will slow, the company didn't specifically call out ad loads until asked. But management did note it sees better targeting driving CTRs (click-through rates) and pricing over time.

However, there are some items for investors to keep in mind moving forward, including the operating expenditure guidance. Specifically, the company is conservative in its operating expenditure guidance but now came in higher than expected.

Facebook guided its total non-GAAP operating expenditure growth of 47 to 57 percent which exceeded the analyst's own estimate of 41 percent and also represents a "sharp acceleration" from 2016 which saw a growth rate of 42 percent.

"As ests move higher going forward we think shares can migrate higher, though some near term indigestion wouldn't surprise us given the magnitude of 2017 investment levels," Walmsley concluded.