Market Overview

KeyBanc: Facebook Could Have 22% Upside

KeyBanc: Facebook Could Have 22% Upside
Related FB
Dan Nathan Sees Unusual Options Activity In Facebook
Tech Sector Earnings: Revenue Growth Widely Expected To Slow, Will Global Uncertainty Weigh?
The Fortune Teller's Predictions For 2019: S&P 500 At A Critical Juncture (Seeking Alpha)

Analysts at KeyBanc Capital Markets turned incrementally bullish on Facebook Inc (NASDAQ: FB) after the company reported its third quarter earnings.

KeyBanc's Andy Hargreaves maintains an Overweight rating on Facebook's stock and boosted the price target from $200 to $220.

The key to the analyst's bullish stance lies with Facebook's ad business, in which total impressions rose 10 percent from the same quarter a year ago,  although it marks a decrease of 19 percent from the prior quarter, Hargreaves said in a Wednesday note. But the sequential decline was offset by a 35-percent increase in average ad pricing from a year ago and 24 percent from the prior quarter. (See Hargreaves' track record here.

The strong ad business signals to investors the "extraordinary demand for and effectiveness" of Facebook's ad products, Hargreaves said. Looking forward to 2018, the social media company's ongoing ad strength and momentum resulted in the analyst boosting his 2018 revenue estimate from $51.3 billion to $53.3 billion. This offsets a nearly $2 billion boost to 2018's expense estimates and helps drive KeyBanc's overall 2018 EBITDA estimate higher from $27.4 billion to $28.4 billion.

Of particular note, Facebook's heavy level of investments in video content and possibly marquee sports events aren't included in the analyst's revenue estimate, which implies even further upside to current estimates.

Facebook's improvements in its ad effectiveness implies the potential for "significant future growth," Hargreaves said. KeyBanc's revised $220 price target is based on a 23x EV/EBITDA using a next-12-months EBITDA estimate of $26.8 billion.

Related Links:

Facebook's Head Of Messaging Talks Monetization

Facebook Earnings Preview: What Might Be Expected From Q3 Results?

Latest Ratings for FB

Dec 2018Tigress FinancialReiteratesBuyBuy
Dec 2018GuggenheimInitiates Coverage OnNeutral
Dec 2018Stifel NicolausDowngradesBuyHold

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Andy Hargreaves Facebook Facebook AdsAnalyst Color Price Target Reiteration Analyst Ratings Tech Best of Benzinga


Related Articles (FB)

View Comments and Join the Discussion!

Latest Ratings

CNPRBC CapitalUpgrades34.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

The Market In 5 Minutes: Facebook, Tesla In The Red As Market Preps For Apple's Latest Earnings

25 Stocks Moving In Thursday's Pre-Market Session