'Growth Stock At Value Multiple': Facebook Analysts React To Q4 Numbers

'Growth Stock At Value Multiple': Facebook Analysts React To Q4 Numbers

Facebook, Inc. FB shares ticked slightly higher Thursday after the company reported impressive fourth-quarter earnings numbers.

Facebook reported adjusted earnings per share of $3.88, beating consensus analyst estimates of $3.22. Revenue of $28 billion also topped analyst expectations of $26.44 billion and represented 31% year-over-year growth.

Facebook also reported average revenue per user of $10.14, beating analyst estimates of $9.49. Facebook’s daily active users climbed to 1.84 billion despite losing 1 million DAUs in the U.S. and Canada.

Unfortunately, Facebook also warned its investors that upcoming changes to the Apple Inc. AAPL iOS 14 and economic reopening trends could weigh on the company’s advertising growth in 2021.

Related Link: Netflix Is Now A Free Cash Flow Story: Analysts React To Q4 Earnings

Growth Story Continues: Bank of America analyst Justin Post said Facebook is facing some uncertainties ahead, but it's still a “growth stock at [a] value multiple.”

“Overall, a strong quarter underscoring strength of FB community, despite external controversies, and early signs of shopping initiative traction,” Post wrote in a note.

Raymond James analyst Aaron Kessler said he's projecting 17% revenue growth in 2022 as Facebook’s long-term growth story continues.

“We believe valuation is attractive at ~26x our 2022E GAAP EPS (24.5x ex cash) vs. 15-20% LT EPS growth,” Kessler wrote.

KeyBanc analyst Justin Patterson said Facebook’s 2021 investments are likely planting the seeds for the company’s next growth phase.

“Historically, investment years have elongated FB's revenue growth and delivered meaningful EPS, and we believe this phase is no different,” Patterson wrote.

Other Revenue Soaring: Morgan Stanley analyst Brian Nowak said Facebook’s roughly $400 million in Other Revenue may be more important than it seems at first glance.

“This is an early sign of budding success within FB’s virtual reality efforts (Oculus Quest 2)…which are important to FB’s long-term efforts to expand their user ecosystem and build the next generation computing platform,” Nowak wrote.

Needham analyst Laura Martin said Apple’s changes could be bad news for Facebook investors.
“As soon as iPhone owners can opt out of advertising via the new iOS 14 permissions, they will,” Martin wrote.

Ratings And Price Targets:

  • Bank of America has a Buy rating and $358 target.
  • Raymond James has a Strong Buy rating and $360 target.
  • Morgan Stanley has an Overweight rating and $345 target.
  • Needham has a Hold rating.
  • KeyBanc has an Overweight rating and $360 target.

Facebook's stock trades around $272.82 at publication time.

Posted In: Aaron KesslerBank of AmericaBrian NowakJustin PattersonJustin PostKeyBancLaura MartinMorgan StanleyNeedhamRaymond JamesAnalyst ColorEarningsNewsPrice TargetTop StoriesAnalyst Ratings