Facebook blew past Wall Street's expectations in its second-quarter earnings.
Facebook blew past Wall Street's expectations in its second-quarter earnings.
Wall Street has subsequently heaped commendation on the company. Its stock, one of the hot tech names that have driven the market's gains this year, is set to open at an all-time high on Thursday.
In the second quarter, Facebook's user base, the largest in the world, grew by 17% year-over-year, with 66% of its 2.01 billion users visiting the social network every day. Its revenues increased 45% from the same quarter a year ago to $9.32 billion, while its earnings per share was $1.32, beating the forecast for $1.13.
Here's a wrap of some of the analyst commentary:
RBC Capital Markets: BULLISH
Rating: Outperform
Price target: $195 ($185 previously)
Comment: "FB might well be the best growth story in tech," said Mark Mahaney.
"Yes, we are incrementally more positive. Core FB is growing extremely well, with almost unprecedented ad revenue growth consistency. More important, we believe that FB’s current low market shares — approximately 15% of global online advertising and 5% of global total advertising — will help it to maintain premium growth for a long time."
Goldman: BULLISH
Rating: Buy
Price target: $205 (previously $180)
Comment: "We maintain our attractive outlook on Facebook, as the company continues to be well-positioned in one of the best secular markets," said the analysts led by Heather Bellini.
"We expect consensus estimates to increase on the back of this quarter’s beat, though management once again pointed to decelerating revenue growth in 2H17 as Facebook ad load reaches saturation. However, we continue to see opportunities for incremental ad load on Instagram, increased engagement from Instagram stories, and (while early) potential for new monetization levers through Messenger and WhatsApp."
Jefferies: BULLISH
Rating: Buy
Price target: $215 (previously $192)
Comment: "Facebook is the best positioned social platform today connecting 2B users worldwide to nearly every advertiser," said the analysts led by Brian Fitzgerald.
"Video across both Facebook & Instagram are the areas to watch as digital video consumption continues to take share from nearly every other form of media consumption. We think there is upside to both ARPU & MAUs driven by increasing engagement across all platforms & the opportunity to grow its digital video advertising business (did we mention FB has yet to try to monetize its 2 other 1B messaging platforms?)."
Pivotal Research Group: NEUTRAL
Rating: Hold
Price target: $140
Comment: "Beyond this year, we are mindful around other issues," said Brian Wieser.
"First, we have the recent EC ruling on Google Shopping and the EC’s approach to dominant companies in general.
Relatedly, the EC is also implementing its new consumer privacy policy (GDPR) in May of next year, which has uncertain implications for both companies.
Third, viewability is a particular concern with Facebook video ad units, as we don’t think most advertisers are aware of just how few of their ads are typically viewed on the platform.
Fourth, digital advertising will soon be approaching a point of saturation, indicating that there are limits to growth which may not be fully accounted for by the investment community, especially as Google and Facebook account for the bulk of the industry’s growth at this point in time."
Macquarie: BULLISH
Rating: Outperform
Price target: $190 ($175 previously)
Comment: "FB is a remarkable success story," said Benjamin Schachter.
"Its advertising model, built on 5mm advertisers, targeting abilities, and consumer usage, has grown faster and bigger than anyone had expected. We see continued strength in the model for years to come.
However, at a market cap of $500b, trading at 16x our ‘18EV/EBITDA, we think much of the advertising business is priced in. As with GOOG, we think that for the stock to appreciate meaningfully above our $190PT, new revenue models need to emerge."
Monness Crespi Hardt: NEUTRAL
Rating: Neutral
Price target: N/A
Comment: "Video is both an opportunity and a potential source of volatility. We actually appreciate Facebook’s methodical strategy by taking a two -pronged approach on building a wide selection of content on the cheap for the upcoming launch and also willing to commit multi-million dollar resources for more premium experiences.
The opportunity here is that greater engagement via mid-roll ads can serve as an offset to the declining impression growth, thereby adding another lever to the story.
The flip side, as CEO Mark Zuckerberg stated, is the changing economics of the story where the 97% incremental margin delivered in 2Q17 is unlikely to be replicated."
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Facebook blew past Wall Street's expectations in its second-quarter earnings. Read Full Story
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