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Facebook Concerns Are 'Overdone,' KeyBanc Says Ahead Of Q4 Print

Facebook Concerns Are 'Overdone,' KeyBanc Says Ahead Of Q4 Print
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Facebook Inc (NASDAQ: FB)'s decision to change its news feed isn't a cause for concern, according to a KeyBanc Capital Markets analyst.

The Analyst

KeyBanc Capital Markets' Andy Hargreaves maintains an Overweight rating on Facebook's stock with an unchanged $220 price target.

The Thesis

"Legitimate concerns" exist about Facebook's social impact, but any near-term concerns surrounding changes to Facebook's news feed are "overdone," Hargreaves said in a research report. (See the analyst's track record here.)

Facebook's move to prioritize friends, family and local content does not imply a reduction in ad volume, but could sustain consumer usage and grow advertising demand over the longer-term, the analyst said. Even if total ad volume does fall, it could be offset by increased pricing, he said.

Facebook is scheduled to report its fourth-quarter results after Wednesday's market close, and Hargreaves offered the following points of interest investors may want to monitor:

Any update to Facebook's prior 2018 costs and expenses guidance, which were said to be up 45 to 60 percent in 2018.

  • Commentary on Facebook's video platform Watch, which so far offered "limited signs of success to date."
  • Facebook's CPMs have accelerated for three consecutive quarters and should show 35-percent year-over-year over growth in the fourth quarter, which would be in-line with the third quarter's growth rate.
  • Facebook is expected to earn $2.05 per share in the quarter on revenue of $12.61 billion versus the consensus estimate of $1.94 per share on revenue of $12.514 billion.

Price Action

Shares of Facebook were trading lower by around 1 percent early in Tuesday's trading session. 

Related Links:

Report: Instagram Advertising Surges 122%, Amazon Ads Growing 'Very Fast'

Canaccord Genuity's Q4 FANG Earnings Preview

Latest Ratings for FB

Apr 2018ArgusMaintainsBuyBuy
Apr 2018Stifel NicolausUpgradesHoldBuy
Apr 2018UBSMaintainsBuyBuy

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Andy Hargreaves Facebook News Feed KeyBanc Capital Markets News Feed ChangesAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


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