What Analysts Are Saying Ahead of Facebook Earnings

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Facebook Inc. (NASDAQ: FB) is scheduled to release its most recent earnings report after the markets close on Wednesday. 24/7 Wall St. has put together a preview ahead of this report and collected what a few different analysts are saying about this social media giant. There are some big questions that Facebook will have to answer going forward concerning its news feed, among other social issues.

The consensus estimates from Thomson Reuters call for Facebook to report $1.95 in earnings per share (EPS) on $12.55 billion in revenue. In the same period of last year, it said it had $1.41 in EPS on revenue of $8.81 billion.

Earlier this month, Facebook announced that it would be changing its newsfeed to favor posts from family and friends over that of publishers, and that sent the stock down more than 5% at one point and has caused publishers to do some serious thinking about how they will adapt to the changes.

While the end result remains a bit murky, what is clear is that publishers that based their businesses on developing massive audiences with little original content are going to be the first to feel the pinch. It seems that among publishers, more are wanting out as a result, and Facebook could stand to lose even more.

Recently, Aegis Capital reiterated a Buy rating and raised its price target to $220 from $215. Its report said:

Our checks have once again been bullish on spend on Facebook and Instagram, with advertisers citing an increase in pricing due to rising demand for Facebook’s inventory, but not to the detriment of ROIs. We also understand that Instagram’s ad loads have increased and brand spend on Instagram Stories shot up in 4Q17. Usage growth have been strong on both Facebook and Instagram. The combination of strong ad checks and strong usage should lead to upside to consensus estimates.

SunTrust also remains very bullish on Facebook with a $240 price target. Its analysts detailed:

We expect Facebook to post strong fourth results on 1/31, driven by continued improvement in monetization and user growth across both Facebook and Instagram. Increased engagement through the mix shift of ad units to video and carousel formats should drive the results. However, aggressive hiring to address content and ad quality issues is likely to cause fiscal year 2018 operating expense guidance to be reiterated rather than improved.

A few other analysts weighed in on Facebook ahead of the report:

  • Deutsche Bank has a Buy rating with a $225 price target.
  • Pivotal Research has a Sell rating with a $147 target.
  • Wedbush has a Buy rating and a $230 price target.
  • JPMorgan also has a Buy rating and a $230 target.
  • Stifel has a Hold rating.
  • Morgan Stanley has a Buy rating with a $215 price target.
  • Wells Fargo has an Outperform rating with a $230 target price.
  • Credit Suisse has an Outperform rating with a $232 price target.
  • Cowen has a Buy rating and a $220 price target.

Excluding Wednesday’s move, the stock was up about 6% year to date, more or less keeping pace with the broad markets. However, it is worth pointing out that this price level is still under where it was before Facebook announced changes to its newsfeed.

Shares of Facebook traded up about 1% at $189.30 on Wednesday, with a consensus analyst price target of $212.64 and a 52-week trading range of $130.30 to $190.66.