What to Look for in Facebook Earnings Wednesday

Chris Lange

Source: Wikimedia Commons
Facebook Inc. (NASDAQ: FB) is scheduled to release its most recent quarterly results after the markets close on Wednesday. After seeing the stock’s incredible rally in 2017, it doesn’t seem like anything can stop Facebook, and it looks like analysts agree.

This stock has vastly outperformed the broad markets, with its stock up about 56% year to date, making it the second best-performing FANG stock, right behind Netflix. Over the past 52 weeks, the stock is up only 37%.

In terms of third-quarter earnings, Thomson Reuters has consensus estimates of $1.28 in earnings per share (EPS) and $9.84 billion in revenue. The same period of last year reportedly had EPS of $1.09 and $7.01 billion in revenue.

Credit Suisse recently reiterated an Outperform rating for Facebook and raised its target price to $235 from $190. Credit Suisse thinks much of the “controversies news” is behind it, and the firm recalibrated its own product-by-product model for the higher estimates.

The firm believes that Facebook will be able to drive long-term revenue growth without a material lift in ad loads. Also noted as drivers were Instagram, Premium Video, DPA and upside to the monetization potential of upcoming new products like Graph Search.

For the third quarter, Credit Suisse increases its mobile news feed estimates from $5.8 billion to $6.2 billion and raised its fourth quarter estimate from $7.3 billion to $7.4 billion. The firm’s report said:

Controversies around Facebook shares that existed end-of-2016 and in the first half of 2017 on ad load growth deceleration now seem well behind us with two consecutive quarters of ad price acceleration to offset. It is the rising advertiser propensity to spend a greater portion of budgets on more targeted buys at effective CPMs more than double that of the untargeted buy.

Here’s what a few other analysts are saying about Facebook ahead of this report:

  • Wedbush has a Buy rating with a $225 price target.
  • Monness Crespi & Hardt has a Buy rating and a $210 target.
  • Piper Jaffray has a Buy rating.
  • Wells Fargo has a Buy rating with a $215 price target.
  • Needham has a Buy rating and a $185 price target.
  • KeyCorp has a Buy rating with a $200 price target.
  • Morgan Stanley has an Overweight rating with a $195 price target.

Shares of Facebook were last seen at $179.52, with a consensus analyst price target of $196.53 and a 52-week range of $113.55 to $180.80.