Analysts Speak Up On Facebook's Big Quarter

Facebook, Inc. FB ripped higher by 10 percent on Thursday after the company reported better-than-expected first-quarter earnings and proved that concerns over the Cambridge Analytica scandal were overblown.

Here’s a rundown of what Wall Street had to say about Facebook stock following the blowout quarter.

Voices From The Street

Macquarie analyst Benjamin Schachter said the strong quarter Facebook reported amid all the negative headlines shows just how much leverage the company has with its users and advertisers.

“The bottom line is that users are showing that they find a lot of utility from FB’s platforms,” Schachter wrote.

Morgan Stanley analyst Brian Nowak said even Facebook’s rising expenses are good news for investors because they are planting seeds for future returns.

“FB is investing for growth in its core business, safety, security,emerging markets, compute power (including to improve their core ad ranking platform), among other initiatives,” Nowak wrote.

Loup Ventures' Gene Munster said the only red flag from the company was commentary related to the potential impact of the General Data Protection Regulation.

“On the earnings call, Facebook management commented that these controls could result in European MAUs and DAUs being flat or down,” Munster wrote.

KeyBanc analyst Andy Hargreaves said Facebook continues to impress by improving the efficiency of its advertising business.

“Facebook's continued improvement in ad effectiveness suggests the potential for significant future growth that we believe is undervalued at current levels,” Hargreaves wrote.

Stifel analyst Scott Devitt said one good quarter doesn’t eliminate user engagement and regulatory risks.

“While business outperformance and user stability in 1Q could help introduce near-term stability to Facebook shares, we remain cautious around longer-term user, engagement and regulatory concerns,” Devitt wrote.

Ratings And Targets

  • Macquarie has an Outperform rating and $200 target.
  • Morgan Stanley has an Overweight rating and $210 target.
  • KeyBanc has an Overweight rating and $245 target.
  • Stifel has a Hold rating and $175 target.

The stock traded around $175.63 at time of publication.

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Posted In: Analyst ColorEarningsNewsPrice TargetTop StoriesAnalyst RatingsTrading IdeasBenjamin SchachterBrian NowakGene MunsterScott Devitt
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