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Stay Tuned For Facebook TV: Ad Sales Will Fund Big Bet On Video

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Stay Tuned For Facebook TV: Ad Sales Will Fund Big Bet On Video

Booming ad revenues should provide enough fuel for Facebook Inc (NASDAQ: FB) to barrel aggressively into video and TV-style programming, a Credit Suisse analyst said Thursday.

Stephen Ju maintains his Outperform rating and raised the target price to $190 from $180. Facebook was up 3.59 percent at $171.56 at publication time.

Facebook reported stronger-than-expected results for its second quarter on Wednesday. Second-quarter earnings came in at $1.32 per share, topping estimates by 19 cents. Facebook delivered sales of $9.321 billion in the quarter, $121 million higher than analyst estimates.

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“From a medium-term product point of view, the rising profit pool from mobile/newsfeed affords FB more room to invest aggressively into its video initiative (both infrastructure and content).” Ju wrote.

“We believe the most important takeaway is the acceleration in year-to-year ad price growth to reach +24% (vs 1Q17's 14%) along with the deceleration of ad impression growth to 19% YOY (vs 1Q17's 32%). 2Q17 results in our view serve as a stronger signal for upside potential for 2H17 and should drive greater urgency among investors to add to FB positions.”

He said his end-of-2018 target price increases to $235 versus the prior $220. “Slower-than-expected advertiser adoption either on a product-by-product or regional basis for Facebook's various ad units is a risk to our estimates,” he wrote.

Facebook CEO Mark Zuckerberg has said that video will become the primary driver of Facebook for the future.

Related Link: Facebook’s Stock Has Another 25 Percent Upside Despite Some Problems Ahead, Analyst Says

Latest Ratings for FB

DateFirmActionFromTo
Feb 2021Loop CapitalMaintainsBuy
Jan 2021BMO CapitalMaintainsOutperform
Jan 2021MKM PartnersMaintainsBuy

View More Analyst Ratings for FB
View the Latest Analyst Ratings

 

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