Market Overview

Morgan Stanley Isn't Too Worried About Facebook Cutting Ties With Third-Party Data Providers

Share:
Morgan Stanley Isn't Too Worried About Facebook Cutting Ties With Third-Party Data Providers
Related FB
Q3 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolio
Moderate Inflation, Positive Retail Earnings Offer Lift In Back-And-Forth Market
Marin Software: A First Whiff Of Spring? (Seeking Alpha)

Facebook, Inc. (NASDAQ: FB) will no longer partner with third-party data providers, which does raise concern among investors but checks with multiple agencies and advertisers reveal encouraging data points, according to Morgan Stanley.

The Analyst

Morgan Stanley's Brian Nowak maintains an Overweight rating on Facebook's stock with a price target lowered from $230 to $200.

The Thesis

Facebook historically counted on third-party data providers to improve targeting, efficiency, ad performance and pricing, Nowak said in a research report. There are also four key reasons severing ties with third-party entities is not only "manageable," but smart for the social media company.

  • Facebook is operating at a position of strength with a lack of a notable competitive platform;
  • It's unclear what percent of Facebook ad buys employed third-party tools in the first place;
  • Alternative options will still be available for advertisers to target Facebook users; and
  • Advertisers are more likely to shift to using their own first-party data when buying ads on Facebook.

Nowak said first-hand checks with eight different agencies and advertisers found no signs of "any material reduction" in ad spend on Facebook's platform.

Facebook's stock faces some near-term potential catalysts, such as co-founder and CEO Mark Zuckerberg speaking in front of the Senate Judiciary Committee April 11 as well as its first quarter earnings report scheduled for April 25.

Estimate Changes

Nowak took a more conservative stance and revised expectations lower:

  • 2018 total revenue from $56.81 billion to $55.89 billion;
  • 2018 advertising revenue from $56.02 billion to $55.1 billion; and
  • 2018 EPS from $7.24 to $6.95.

Price Action

Shares of Facebook were trading lower by 2 percent at $152.85 in Wednesday's pre-market session.

Related Link:

Canaccord Keeps The Faith In Facebook, Says Advertisers Will Follow Customers

Facebook's Privacy Scandal Will 'Linger,' But Aegis Capital Remains Bullish In The Long Run

Latest Ratings for FB

DateFirmActionFromTo
Nov 2018ArgusMaintainsBuyBuy
Oct 2018Morgan StanleyMaintainsOverweightOverweight
Oct 2018Raymond JamesMaintainsOutperformOutperform

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Brian Nowak Facebook Monetization Facebook Privacy Morgan StanleyAnalyst Color Price Target Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (FB)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ACBIKeefe Bruyette & WoodsUpgrades21.0
COTYBMO CapitalUpgrades12.0
ECCOppenheimerDowngrades0.0
VYGRRaymond JamesUpgrades0.0
ATNXJP MorganUpgrades15.0
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: China Tariffs, Zuckerberg, Spotify, Model 3 Deliveries And More

Tesla's Q1 Deliveries 'Better Than Feared,' KeyBanc Stays Positive For The Near Term